(Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Consider how Steinback Valley Stream Park Lodge could use capital budgeting to decide whether the $12,000,000 Stream Park Lodge expansion would be a good investment. Assume Steinback Valley's managers developed the following estimates concerning the expansion: .: (Click the icon to view the estimates.) (Click the icon to view additional information.) What is the project's IRR? Is the investment attractive? Why or why not? 0 Data Table 116 skiers Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Steinback 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 149 days 9 years 237 $ 84 12,000,000 12% Print Done * More Info Assume that Steinback Valley uses the straight-line depreciation method and expects the lodge expansion to have no residual value at the end of its nine-year life. The project is expected to have an average annual net cash inflow of $2,644,452. The NPV of the expansion is expected to be $2,089,640. Print Done i Reference Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.870 0.758 0.661 0.577 | 0.442 0.388 0.340 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.853 0.728 0.623 0.534 0.458 0.394 0.339 | 0.292 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 0.811 0.660 0.538 0.439 0.359 0.294 0.242 0.199 0.803 0.647 0.522 0.422 0.342 0.278 0.226 0.184 0.795 0.634 0.507 0.406 | 0.326 0.262 0.211 0.170 0.788 0.622 0.492 0.390 0.310 0.247 0.197 0.158 0.780 0.610 0.478 0.375 0.295 0.233 0.184 0.146 1077 500 L AL 264 1004122010 172 10 125 9% 10% 12% 14% 15% 16% 18% 20% 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.842 0.826 0.797 0.769 0.756 0.743 0.7180.694 0.772 0.751 0.712 0.675 0.658 0.641 | 0.609 0.579 | 0.708 0.683 | 0.636 0.592 0.572 0.552 0.516 0.482 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 | 0.502 | 0.467 0.404 0.351 0.327 0.305 0.266 0.233 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 0.388 0.350 0.287 | 0.237 0.215 | 0.195 0.162 0.135 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 0.299 0.263 0.160 0.141 0.125 0.099 0.078 0.275 0.239 0.183 0.140 0.123 0.108 | 0.084 0.065 0.252 0.218 0.163 | 0.123 0.107 | 0.093 0.071 0.054 0.231 0.1980.146 0.108 0.093 | 0.080 | 0.060 0.045 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 0.194 0.164 0.116 0.083 0.070 | 0.060 | 0.043 0.031 0.178 0.149 0.104 0.073 0.061 0.051 | 0.037 0.026 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.022 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.015 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.013 | 0.116 0.092 | 0.059 0.038 0.030 0.024 0.016 0.010 106 LOA L 0052 1022 1026 1021 Inn Long 0.205 Print Done i Reference Periods Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.970 1.942 1.913 1.886 1.859 1.8331.808 1.783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.528 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.283 2.246 2.174 2.106 3.902 3.808 3.717 | 3.630 3.546 | 3.465 3.387 3.312 3.240 3.170 | 3.037 2.914 2.855 2.798 2.690 2.589 4.853 4.713 4.580 4.452 | 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.991 5.795 5.601 5.417 5.2425.076 4.917 4.767 4.623 4.486 4.355 | 4.111 3.889 3.784 3.685 3.498 3.326 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.605 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5335 4.968 4.639 4.487 4.344 | 4.078 3.837 8.566 8.162 7.786 | 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.031 9.471 8.983 8.530 8.111 7.722 | 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 | 4.494 4.192 10.368 9.787 9.2538.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.327 11.255 10.575 9.954 9.3858.8638.384 7.943 7.536 7.1616.814 6.1945.660 5.421 5.197 4.793 4.439 12.134 11.348 10.635 | 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 | 4.910 4.533 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5.008 4.611 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.675 14.718 13.578 12.561 | 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 5.954 5.669 5.162 4.730 15.562 14.292 13.166 12.166 | 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.812 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 | 7.366 6.550 6.198 5.877 5.316 4.844 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 | 7.469 6.623 6.259 5.929 5.353 4.870 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.6497.562 6.687 6.312 5.973 5.384 4.891 19.660 17.658 15.937 14.451 13.163 12.042 11.061 | 10.2019.442 8.772 7.645 6.743 6.359 6.011 5.410 4.909 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 7.718 6.792 6.399 6.044 5.432 4.925 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 | 7.784 6.835 6.4346.073 5.451 4.937 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.464 6.097 5.467 4.948 22 705 100 1241 17 877 115 0R21 14 275 | 1202 1 11 26 10 10 1 a 020 LO 164 7 QOR LO L 101 16 119 15.40 11 066 Print Done 10.202 10.444 14. 0I 13.409 12.JUJ | 11.212 IU.JIJ .JUU UTO2 U.Ju 1.412 4.937 4.948 4.956 4.964 20.400 21.243 22.023 22.795 23.560 24.316 25.066 25.808 32.835 39.196 U.UUJT.LIU 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.8239.077 7.843 20.121 17.877 15.983 14.375 13.003 11.826 10.8109.929 | 9.161 7.896 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 | 9.237 7.943 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 | 9.370 8.022 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.055 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 6.835 6.873 6.906 6.935 6.961 6.983 7.003 7.105 7.133 6.434 6.464 6.491 6.514 6.534 6.551 6.566 6.642 6.661 6.073 6.097 6.118 6.136 6.152 6.166 6.177 6.233 6.246 5.451 5.467 5.480 5.492 5.502 5.510 5.517 5.548 5.554 4.970 4.975 4.979 4.997 4.999 Print Done The internal rate of return (IRR) of the expansion is The project is since it will earn a the company's 12% hurdle rate. 10-12% 12-14% 15-16% 16-18% The internal rate of return (IRR) of the expansion is The project is since it will earn a return than the company's 12% hurdle rate. attractive not attractive The internal rate of return (IRR) of the expansion is The project is since it will earn a return than the company's 12% hurdle rate. higher lower (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Consider how Steinback Valley Stream Park Lodge could use capital budgeting to decide whether the $12,000,000 Stream Park Lodge expansion would be a good investment. Assume Steinback Valley's managers developed the following estimates concerning the expansion: .: (Click the icon to view the estimates.) (Click the icon to view additional information.) What is the project's IRR? Is the investment attractive? Why or why not? 0 Data Table 116 skiers Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Steinback 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 149 days 9 years 237 $ 84 12,000,000 12% Print Done * More Info Assume that Steinback Valley uses the straight-line depreciation method and expects the lodge expansion to have no residual value at the end of its nine-year life. The project is expected to have an average annual net cash inflow of $2,644,452. The NPV of the expansion is expected to be $2,089,640. Print Done i Reference Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.870 0.758 0.661 0.577 | 0.442 0.388 0.340 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.853 0.728 0.623 0.534 0.458 0.394 0.339 | 0.292 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 0.811 0.660 0.538 0.439 0.359 0.294 0.242 0.199 0.803 0.647 0.522 0.422 0.342 0.278 0.226 0.184 0.795 0.634 0.507 0.406 | 0.326 0.262 0.211 0.170 0.788 0.622 0.492 0.390 0.310 0.247 0.197 0.158 0.780 0.610 0.478 0.375 0.295 0.233 0.184 0.146 1077 500 L AL 264 1004122010 172 10 125 9% 10% 12% 14% 15% 16% 18% 20% 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.842 0.826 0.797 0.769 0.756 0.743 0.7180.694 0.772 0.751 0.712 0.675 0.658 0.641 | 0.609 0.579 | 0.708 0.683 | 0.636 0.592 0.572 0.552 0.516 0.482 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 | 0.502 | 0.467 0.404 0.351 0.327 0.305 0.266 0.233 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 0.388 0.350 0.287 | 0.237 0.215 | 0.195 0.162 0.135 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 0.299 0.263 0.160 0.141 0.125 0.099 0.078 0.275 0.239 0.183 0.140 0.123 0.108 | 0.084 0.065 0.252 0.218 0.163 | 0.123 0.107 | 0.093 0.071 0.054 0.231 0.1980.146 0.108 0.093 | 0.080 | 0.060 0.045 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 0.194 0.164 0.116 0.083 0.070 | 0.060 | 0.043 0.031 0.178 0.149 0.104 0.073 0.061 0.051 | 0.037 0.026 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.022 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.015 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.013 | 0.116 0.092 | 0.059 0.038 0.030 0.024 0.016 0.010 106 LOA L 0052 1022 1026 1021 Inn Long 0.205 Print Done i Reference Periods Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.970 1.942 1.913 1.886 1.859 1.8331.808 1.783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.528 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.283 2.246 2.174 2.106 3.902 3.808 3.717 | 3.630 3.546 | 3.465 3.387 3.312 3.240 3.170 | 3.037 2.914 2.855 2.798 2.690 2.589 4.853 4.713 4.580 4.452 | 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.991 5.795 5.601 5.417 5.2425.076 4.917 4.767 4.623 4.486 4.355 | 4.111 3.889 3.784 3.685 3.498 3.326 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.605 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5335 4.968 4.639 4.487 4.344 | 4.078 3.837 8.566 8.162 7.786 | 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.031 9.471 8.983 8.530 8.111 7.722 | 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 | 4.494 4.192 10.368 9.787 9.2538.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.327 11.255 10.575 9.954 9.3858.8638.384 7.943 7.536 7.1616.814 6.1945.660 5.421 5.197 4.793 4.439 12.134 11.348 10.635 | 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 | 4.910 4.533 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5.008 4.611 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.675 14.718 13.578 12.561 | 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 5.954 5.669 5.162 4.730 15.562 14.292 13.166 12.166 | 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.812 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 | 7.366 6.550 6.198 5.877 5.316 4.844 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 | 7.469 6.623 6.259 5.929 5.353 4.870 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.6497.562 6.687 6.312 5.973 5.384 4.891 19.660 17.658 15.937 14.451 13.163 12.042 11.061 | 10.2019.442 8.772 7.645 6.743 6.359 6.011 5.410 4.909 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 7.718 6.792 6.399 6.044 5.432 4.925 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 | 7.784 6.835 6.4346.073 5.451 4.937 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.464 6.097 5.467 4.948 22 705 100 1241 17 877 115 0R21 14 275 | 1202 1 11 26 10 10 1 a 020 LO 164 7 QOR LO L 101 16 119 15.40 11 066 Print Done 10.202 10.444 14. 0I 13.409 12.JUJ | 11.212 IU.JIJ .JUU UTO2 U.Ju 1.412 4.937 4.948 4.956 4.964 20.400 21.243 22.023 22.795 23.560 24.316 25.066 25.808 32.835 39.196 U.UUJT.LIU 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.8239.077 7.843 20.121 17.877 15.983 14.375 13.003 11.826 10.8109.929 | 9.161 7.896 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 | 9.237 7.943 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 | 9.370 8.022 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.055 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 6.835 6.873 6.906 6.935 6.961 6.983 7.003 7.105 7.133 6.434 6.464 6.491 6.514 6.534 6.551 6.566 6.642 6.661 6.073 6.097 6.118 6.136 6.152 6.166 6.177 6.233 6.246 5.451 5.467 5.480 5.492 5.502 5.510 5.517 5.548 5.554 4.970 4.975 4.979 4.997 4.999 Print Done The internal rate of return (IRR) of the expansion is The project is since it will earn a the company's 12% hurdle rate. 10-12% 12-14% 15-16% 16-18% The internal rate of return (IRR) of the expansion is The project is since it will earn a return than the company's 12% hurdle rate. attractive not attractive The internal rate of return (IRR) of the expansion is The project is since it will earn a return than the company's 12% hurdle rate. higher lower
