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AdventureParks Ltd is evaluating the construction of a new theme park. The theme park would cost...

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Finance

AdventureParks Ltd is evaluating the construction of a new themepark. The theme park would cost $ 495 ?million, but would operatefor 20 years. AdvertureParks expects annual cash flows fromoperating the theme park to be $ 70.6 million and its cost ofcapital is 12.0 %.

a. Prepare an NPV profile of the purchase.

b. Identify the IRR on the graph.

c. Should AdventureParks go ahead with the? purchase?

d. How far off could? AdventureParks' cost of capital estimatebe before your purchase decision would? change?

Answer & Explanation Solved by verified expert
3.8 Ratings (327 Votes)
b IRR is 13 from the graphc As IRR Cost of capital    See Answer
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