Assume that Golden Valley's managers developed the following estimates concerning a planned expansion to its

Brook Park Lodge (all numbers assumed):

Number of additional skiers per day. . . . . . . . . . . . . . . . .	117
Average number of days per year that weather
conditions allow skiing at Golden Valley. . . . . . . .	162
Useful life of expansion (in years). . . . . . . . . . . . . . . . . . .	8
Average cash spent by each skier per day. . . . . . . . . . .	$244
Average variable cost of serving each skier per day. . . .	$142
Cost of expansion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$8,000,000
Discount rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14%

Assume that

Golden Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $800,000 at the end of its eight-year life. It has already calculated the average annual net cash inflow per year to be $1,933,308. Use present and future annuity factor tables.

Requirement 1. What is the project's NPV? Is the investment attractive? Why or why not?

Assume the expansion has no residual value. What is theproject's NPV? Is the investment still attractive? Why or whynot?