Consider how Cole Valley Spring Park Lodge could use capital budgeting to decide whether the $12,000,000 Spring Park Lodge expansion would be a good investment. Assume Cole Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) A (Click the icon 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 nearest dollar)? Is the Investment attractive? Why or why not? Net Cash PV Factor Calculate the net present value of the expansion. (Enter any factor amounts to three decimal places, X.XXX. Round to the nearest whole dollar.) Annuity PV Factor Present Years Inflow (i=12%, n=10) (i=12%, n=10) Value 1 - 10 Present value of annuity 10 Present value of residual value Total PV of cash inflows 0 Initial investment Net present value of expansion The expansion is project because its NPV is Enter any number in the edit fields and then continue to the next question i Data Table Number of additional skiers per day 122 skiers Average number of days per year that weather conditions 147 days 10 years allow skiing at Cole 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 $ 240 77 12,000,000 Discount rate 12% Print Done i More Info Assume that Cole Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $750,000 at the end of its ten-year life. They have already calculated the average annual net cash inflow per year to be $2,923,242. Print Done Reference Present Value of $1 Periods 1 2 3 4 5 1% 0.990 0.980 0.971 0.961 0.951 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.864 0.823 0.784 6% 0.943 0.890 0.840 0.792 0.747 7% 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 12% 0.893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 15% 0.870 0.756 0.658 0.572 0.497 16% 0.862 0.743 0.641 0.552 0.476 18% 0.847 0.718 0.609 0.516 0.437 20% 0.833 0.694 0.579 0.482 0.402 6 0.432 7 0.376 8 9 10 0.942 0.933 0.923 0.914 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.665 0.627 0.592 0.558 0.666 0.623 0.582 0.544 0.508 0.630 0.583 0.540 0.500 0.463 0.596 0.547 0.502 0.460 0.422 0.564 0.513 0.467 0.424 0.386 0.507 0.452 0.404 0.361 0.322 0.456 0.400 0.351 0.308 0.270 0.327 0.284 0.247 0.410 0.354 0.305 0.263 0.227 0.370 0.314 0.266 0.225 0.191 0.335 0.279 0.233 0.194 0.162 11 12 13 14 15 0.896 0.887 0.879 0.870 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0.469 0.442 0.417 0.475 0.444 0.415 0.388 0.362 0.429 0.397 0.368 0.340 0.315 0.388 0.356 0.326 0.299 0.275 0.350 0.319 0.290 0.263 0.239 0.287 0.257 0.229 0.205 0.183 0.237 0.208 0.182 0.160 0.140 0.215 0.187 0.163 0.141 0.123 0.195 0.168 0.145 0.125 0.108 0.162 0.137 0.116 0.099 0.084 0.135 0.112 0.093 0.078 0.065 0.458 0.436 16 17 18 19 0.853 0.844 0.836 0.828 0.728 0.714 0.700 0.686 0.623 0.605 0.587 0.570 0.534 0.513 0.494 0.475 0.394 0.371 0.350 0.331 0.339 0.317 0.296 0.277 0.292 0.270 0.250 0.232 0.252 0.231 0.212 0.194 0.218 0.198 0.180 0.164 0.163 0.146 0.130 0.116 0.123 0.108 0.095 0.083 0.107 0.093 0.081 0.070 0.093 0.080 0.069 0.060 0.071 0.060 0.051 0.054 0.045 0.038 0.031 0.416 0.396 0.043 Print Done Reference - 12% 0.893 14% 0.877 15% 0.870 18% 0.847 20% 0.833 Periods 1 2 3 1.970 1.913 1.690 1.647 1.626 1.566 1.528 16% 0.862 1.605 2.246 2.798 3.274 4 2.402 3.037 3.605 2.322 2.914 3.433 2.283 2.855 3.352 2.174 2.690 3.127 2.106 2.589 2.991 5 6 7 8 9 10 Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.942 1.886 1.859 1.833 1.808 1.783 1.759 1.736 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 8.566 8.162 7.786 7.435 7.108 6.802 5.995 5.759 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 12.134 11.348 10.635 | 9.986 9.394 8.853 7.904 7.487 7.103 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 17.226 15.678 14.32413.134 12.085 11.158 10.336 9.604 8.950 8.365 4.111 4.564 4.968 5.328 5.650 3.889 4.288 4.639 4.946 5.216 3.784 4.160 4.487 4.772 5.019 3.685 4.039 4.344 4.607 4.833 3.498 3.812 4.078 4.303 4.494 3.326 3.605 3.837 4.031 4.192 6.515 6.247 7.499 6.805 4.656 11 12 13 14 15 8.358 5.938 6.194 6.424 6.628 6.811 5.453 5.660 5.842 6.002 6.142 5.234 5.421 5.583 5.724 5.847 5.029 5.197 5.342 5.468 5.575 5.669 5.749 5.818 5.877 4.793 4.910 5.008 5.092 4.327 4.439 4.533 4.611 4.675 16 17 18 19 6.974 7.120 7.250 7.366 6.265 6.373 6.467 6.550 5.954 6.047 6.128 6.198 5.162 5.222 5.273 5.316 4.730 4.775 4.812 4.844 Print Done