Concept Check Golf Course installing a new Automatic Sprinkler System The eighteen-hole Redwood Golf Course is in need of a new sprinkler system, which is estimated to cost $1 million. The Golf Course Superintendent, who is in charge of maintaining the golf course, has advised the members that the system must be replaced within the next year because the system is beginning to fail. The board of directors has known about this problem for several years but has been putting off the repair due to the cost. The members, however, have been complaining hbecause the condition of the course is deteriorating. After looking into the matter further, the Board estimates that the property has lost nearly $250,000 in incremental profits over the past year alone due to membership termi- nations and lower guest fees and golf shop sales. If this problem is not solved quickly, more members will leave and revenues will continue to decrease Mr. Hans Tripler, general manager of Redwood, has requested a loan for $1 million from a local bank. lhe bank has offered to grant the loan at a 65% interest rate for a term of ten years. QUESTIONS 1. Calculale the annul paymont on the loan. C-APTER -INVESTMENT ANALYSIS 2 Calcutate the paytack pariod on the project basod on the amount of revonues currenitly boing lost by the golf oporation. 3. The golf prolessional bolloves that with the installation of the new sprinkder system the club wil see now mombors pining and golf shop rovenues increasing. Ho estimatos the club wil onjoy the following incremental profits, which lovel off in yoar & Incremental Profits $ 150,000 $ 175,000 $ 200,000 $ 225,000 S 250,000 Rasod on tho incronnental profits in the table and a count ralo of 9%, cacudate the P. NPV and IRR of the irigation projpct, assuming the spinkler system has a ton-year useful ifo with no sahage valuo at the end of ton yors