= Consider how Smith Valley Waterfall Park Lodge could use capital budgeting to decide whether the $12,000,000 Waterfall Park Lodge expansion would be a good investment. Assume Smith Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) (Click the icon to view additional information.) Years Years 1-8 Year 8 Part 1 of 2 Year 0 Present value of annuity Present value of residual value Total PV of cash inflows Initial investment Net present value of expansion C Calculate the net present value of the expansion. (Enter any factor amounts to three decimal places, X.XXX. Round to the nearest whole dollar.) Annuity PV Factor PV Factor (i=12%, (i=12%, n=8) n=8) Net Cash Inflow Points: 0 of 22 (Click the icon to view Present Value of

$1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) What is the project's NPV (round to nearest dollar)? Is the investment attractive? Why or why not? Save Present Value

Consicier how Smith Valley Waterfall Park Lodge could use capital budgeting to (Click the icon to view Present Value of $1 table.) decide whether the $12,000,000 Waterfall Park Lodge expansion would be a good investrhent. Assume Smith Valley's managers developed the following estimates (Click the icon to view Present Value of Ordinary Annuity of $1 table.) concerning the expansion: (Click the icon fo view the estimates.) What is the project's NPV (round to nearest dollar)? Is the investment attractive? Why or why not? (Click the icon to view additional information.) Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Smith Valley Useful life of expansion (in years) Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion 12,000,000 Discount rate 12% Print Assume that Smith Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $500,000 at the end of its eight-year life. They have already calculated the average annual net cash inflow per year to be $2,940,300