2022SP ACCT-2302-86001 Homework: Ch.11 Learning Objective 4 Question 5, SM11-12 (similar to) Part 1 of 2 HW Score: 18.18%, 8 of 44 points O Points: 0 of 22 Save Consider how Smith 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 Smith Valley's managers developed the following estimates concering the expansion: (Click the icon to view the estimates.) (Click the loon to view additional information) (Click the icon to view Present Value of $1 table) (Click the icon to view Present Value of Ordinary Annuity of $1 table What is the project's NPV (round to nearest dollar)? Is the investment attractive? Why or why not? Calculate the net present value of the expansion. (Enter any factor amounts to three decimal places, xXxXx Round to the nearest whole dollar.) Years Years 1-7 Present value of annuity Net Cash Inflow Annuity PV Factor PV Factor (8% (87) n=7) Present Value Year 7 Present value of residual value Total PV of cash inflows Year 0 Initial investment Net present value of expansion Data table More info: Assume that Smith Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $950,000 at the end of its seven-year life. They have already calculated the average annual net cash inflow per year to be $2.870,904 Number of additional skiers per day 122 skiers Average number of days per year that weather conditions. 148 days allow skiing at Smith Valley Useful life of expansion (in years) 7 years Average cash spent by each skier per day S 247 Average variable cost of serving each skier per day 88 Cost of expansion 12,500,000 8% Discount rate Print Done Print Done