Refer to Short Exercise S26-4. Continue to assume that the expansion has no residual value. What is the project’s IRR? Is the investment attractive? Why or why not?

Data From Short Exercise S26-4:

Consider how Stenback Valley Snow Park Lodge could use capital budgeting to decide whether the $11,000,000 Snow Park Lodge expansion would be a good investment.
Assume Stenback Valley’s managers developed the following estimates concerning the expansion:

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Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Stenback 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 $ 116 skiers 143 days 8 years 244 82 11,000,000 12%