Net present value method$-$annuity for a service company

Stay$-$In$-$Style $($SIS$)$ Hotels Inc, is considering the construction of a new hotel for $$90$ million. The expected life of the hotel is $10$ years with no residual value. The

hotel is expected to earn revenues of $$26$ million per year. Total expenses, including depreciation, are expected to be $$15$ million per year. Stay$-$In$-$Style Hotels'

management has set a minimum acceptable rate of return of $14\%.$

a$.$ Determine the equal annual net cash flows from operating the hotel. Enter your answer in million. Round your answer to two decimal places.

b$.$ Compute the net present value of the new hotel, using the present value of an annuity of $$1$ table above. Round to the nearest million dollars. If required,

use the minus sign to indicate a negative net present value.

Net present value of hotel project: $$

million