Net Present Value Method$-$Annuity

Take a Load Off Hotels is considering the construction of a new hotel for $$76$ million. The expected life of the hotel is $19$ years with no residual value. The hotel is expected to

earn revenues of $$12\mathrm{.}6$ million per year. Total expenses, including straight$-$line depreciation, are expected to be $$6$ million per year. Take a Load Off's management has set a

minimum acceptable rate of return of $6\%.$

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

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Open spreadsheet

a$.$ Determine the equal annual net cash flows from operating the hotel. Round your answer to one decimal place.

$$,$ million

b$.$ Calculate the net present value of the new hotel at $6\%$ for $19$ periods. Do not round intermediate calculations. Round to the nearest million dollars. If the net

present value is negative, enter the amount using a minus sign.

$

million