# Hideaway Hotels is considering the construction of a new hotel for $150 million. The expected life of

## Question:

(a) Determine the equal annual net cash flows from operating the hotel.

(b) Calculate the net present value of the new hotel using the present value factor of an annuity of $1 at 14% for 30 periods of 7.0027. Round to the nearest million dollars.

(c) Does your analysis support construction of the new hotel?

Net Present Value

What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Annuity

An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...

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