Question: Consider how Root Valley Stream Park Lodge could use capital budgeting to decide whether the $11,000,000 Stream Park Lodge expansion would be a good investment.

Consider how Root Valley Stream Park Lodge could use capital budgeting

Consider how Root Valley Stream Park Lodge could use capital budgeting to decide whether the $11,000,000 Stream Park Lodge expansion would be a good investment. Assume Root Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) Assume that Root Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $600,000 at the end of its eight-year life. The average annual operating income from the expansion is $1,421,705 and the depreciation has been calculated as $1,300,000. Calculate the ARR. Round to two decimal places

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