Net Present Value Method-Annuity Model 99 Hotels is conslderlng the construction of a new hotel for s80 mllion. The expected lfe of the hotel Is 20 years with no resldual value. The hotel is expected to earn revenues of $15 million per year. Total expenses, including straight-line depreciation, are expected to be $6 million per year. Model 99 management has set a minimum acceptable rate of retum of 10%. a. Determine the equal annual net cash flows from operating the hotel million b. Calculate the net present value of the new hotel, using the present value factor of an annuity of 1 at 10% for 20 periods of 8.5136. Round to the nearest million dollars. Enter all amounts as positive numbers (in millions, except present value factor) Annual net cash flow Present value of an annuity of S1 at 10% for 20 periods Present value of hotel project cash flows Less hotel construction costs Net present value of hotel project 8.5136 c. Which of the following statements is correct regarding this potential project? a. They should build the hotel because the present value of the hotel's operating cash flows exceeds the construction costs. b. They should build the hotel because the present value of the hotel's operating cash flows is less than the construction costs. c. They should buld the hotel because the present value of the hotel's operating cash flows Is equal to the construction costs. d. They should not build the hotel because the net present value is negative