Please answer the Requirements according to the example (The numbers are not the same). Please make sure your answer is correct. Thanksss

Consider how Preston Valley Spring Park Lodge could use capital budgeting to decide whether the $12,500,000 Spring Park Lodge expansion would be a good investment. Assume Preston Valley's managers developed the following estimates concerning the expansion: E: (Click the icon to view the estimates.) (Click the icon to view additional information.) Read the requirements. Requirement 1. Will the payback change? Explain your answer. Recalculate the payback if it changes. Round to one decimal place. Select the formula to calculate the payback period. .... Data table 117 skiers 148 days 8 years Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Preston Valley 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 Discount rate $ 243 85 12,500,000 14% Print Done More info Under the assumption that the expansion would have a residual value of $500,000, the managers calculated the payback period to be 4.6 years, the ARR to be 19.01%, the average annual operating income to be $1,235,928, the average amount invested to be $6,500,000, and the average annual net cash inflow to be $2,735,928. Assume that Preston Valley uses the straight-line depreciation method and now expects the lodge expansion to have zero residual value at the end of its eight-year life. Print Done Select the formula to calculate the payback period. Amount invested Expected annual net cash inflow = Payback The payback will continue to be 3.9 years. The residual value does not affect the computation of the payback and the payback method does not consider cash flows that occur after the payback period. Requirement 2. Will the project's ARR change? Explain your answer. Recalculate ARR if it changes. Round to two decimal places. Select the formula to calculate the ARR. Average annual operating income Average amount invested ARR The ARR will now be 31.58 %. The ARR changes because the depreciation when the residual value changes to zero. The average annual operating income (numerator) will be lower Additionally, the average investment (denominator) is lower when the asset does not have a residual value. expense is higher Requirement 3. Assume Preston Valley screens its potential capital investments using the following decision criteria: 4.9 years Maximum payback period Minimum accounting rate of return 18.25 % Will Preston Valley consider this project further or reject it? both decision The payback period is shorter than the 4.9-year maximum, and the ARR is higher than the 18.25% minimum. Since the investment meets criteria, Preston Valley will want to consider this investment further