1. 2. Compute the average annual net cash inflow from the expansion. Compute the average annual operating income from the expansion. Compute the payback period. Compute the ARR. 3. 4. Consider how Frost Valley, a popular ski resort, Assume that Frost Valley uses the straight-line could use capital budgeting to decide whether the depreciation method and expects the lodge $9.5 million Stream Park Lodge expansion would be expansion to have a residual value of $700,000 at a good investment the end of its ten-year life. E (Click the icon to view the expansion Read the requirements estimates.) Requirement 1. Compute the average annual net cash inflow from the expansion. First enter the formula, then compute the average annual net cash inflow from the expansion. (Round your answer to the nearest dollar.) Average annual net cash inflow Assume that Frost Valley's managers developed the following estimates concerning a planned expansion to its Stream Park Lodge (all numbers assumed): Number of additional skiers per day.... 124 Average number of days per year that weather conditions allow skiing at Frost Valley 163 Useful life of expansion (in years).... 10 Average cash spent by each skier per day .. $ 245 Average variable cost of serving each skier per day . . . . $ 138 Cost of expansion..... $ 9,500,000 Discount rate.... 12%