Amenity Hotels Inc. is considering the construction of a new hotel for $50 million. The expected life of the hotel is 25 years, with no residual value. The hotel is expected to earn revenues of $30 million per year. Total expenses, including depreciation, are expected to be $23 million per year. Amenity Hotels management has set a minimum acceptable rate of return of 14%.

a. Determine the equal annual net cash flows from operating the hotel. Round to the nearest million dollars. _______ million

b. Compute the net present value of the new hotel. Use 6.87293 for the present value of an annuity of $1 at 14% for 25 periods. Round to the nearest million dollars.

Net present value of hotel project: ______ million

c. Does your analysis support construction of the new hotel?

Yes or No

, because the net present value is

positive or negative

.