= Homework: Chapter 12 Homework (required) Question 8, E12-35A (similar to) Part 1 of 4 HW Score: 74%, 7.4 of 10 points Points: 0 of 1 Consider how Clare Valley, a popular ski resort, could use capital budgeting to decide whether the $8 million Waterfall Park Lodge expansion would be a good investment. (Click the icon to view the expansion estimates.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) Read the requirements. (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) Data table Requirement 1. What is the project's NPV? Is the investment attractive? Why or why not? Calculate the net present value of the expansion. (Round your answer to the nearest whole dollar. Use parentheses or a minus Net present value of expansion Requirements 1. What is the project's NPV? Is the investment attractive? Why or why not? 2. Assume the expansion has no residual value. What is the project's NPV? Is the investment still attractive? Why or why not? Print Done Assume that Clare Valley's managers developed the following estimates concerning a planned expansion to its Waterfall Park Lodge (all numbers assumed): Number of additional skiers per day 117 Average number of days per year that weather conditions allow skiing at Clare Valley. 164 Useful life of expansion (in years).... 8 Average cash spent by each skier per day $ 246 Average variable cost of serving each skier per day . $ 145 Cost of expansion $ 8,000,000 10% Discount rate Assume that Clare Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $800,000 at the end of its eight-year life. It has already calculated the average annual net cash inflow per year to be $1,937,988. Print Done