Consider how Steinback Valley Spring Park Lodge could use capital budgeting to decide whether the $13,000,000 Spring Park Lodge expansion would be a good investment. Assume Steinback Valley's managers developed the following estimates concerning the expansion: LOADING... (Click the icon to view the estimates.) Assume that Steinback 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. The average annual operating income from the expansion is $1,286,740 and the depreciation has been calculated as $1,562,500. Calculate the ARR. Round to two decimal places.

Number of additional skiers per day 115 skiers

Average number of days per year that weather conditions allow skiing at Steinback Valley 152 days

Useful life of expansion 8 years

Average cash spent by each skier per day $243

Average variable cost of serving each skier per day 80

Cost of expansion 13,000,000

Discount rate10%

= ARR

= %