E12-32A & E12-33A Wolf Valley Expansion Data Set (5 points): Assume that Wolf Valley's managers developed the following estimates concerning a planned expansion to its Brook Park Lodge (all numbers assumed): Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Wolf Valley 125 160 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 $8,000,000 Discount rate 12% Assume that Wolf Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $1,000,000 at the end of its eight-year life. Requirements 1. 2. 3. 8 $240 $142 Compute the average annual net cash inflow from the expansion. Compute the average annual operating income from the expansion. Compute the payback period. 4. Compute the ARR. 5. Assume that the expansion has no residual value, compute the project's NPV

E12-32A \& E12-33A Wolf Valley Expansion Data Set ( 5 points): Assume that Wolf Valley's managers developed the following estimates concerning a planned expansion to its Brook Park Lodge (all numbers assumed): Assume that Wolf Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $1,000,000 at the end of its eight-year life. Requirements 1. Compute the average annual net cash inflow from the expansion. 2. Compute the average annual operating income from the expansion. 3. Compute the payback period. 4. Compute the ARR. 5. Assume that the expansion has no residual value, compute the project's NPV