Consider how Frost Valley, a popular ski resort, could use capital budgeting to decide whether the $9 million Snow Park Lodge expansion would be a good investment. (Click the icon to view the expansion estimates.) 5 (Click the icon to view the present value annuity factor table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value annuity factor table.) ck the icon to view the future value factor table.) Read the requirements. Requirement 1. What is the project's NPV? Is the investment attractive? Why or why not? Calculate the net present value of the expansion. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.) Net present value of expansion $ Data Table Assume that Frost Valley's managers developed the following estimates concerning a planned expansion to its Snow Park Lodge (all numbers assumed): Number of additional skiers per day....... 125 Average number of days per year that weather conditions allow skiing at Frost Valley 156 Useful life of expansion (in years). ... Average cash spent by each skier per day ........ 244 Average variable cost of serving each skier per day .... $ 136 Cost of expansion.... . $ 9,000,000 Discount rate. Assume that Frost Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $1,000,000 at the end of its nine-year life. It has already calculated the average annual net cash inflow per year to be $2,106,000. 10% Print Done Reference Periods 16% 1% 0.990 1.970 2.941 3.902 4.853 2% 0.980 1.942 2.884 3.808 4.713 3% 0.971 1.913 2.829 3.717 4.580 4% 0.962 1.886 2.775 3.630 4.452 1.605 2.246 2.798 3.274 18% 0.847 1.566 2.174 2.690 3.127 20% 0.833 1.528 2.106 2.589 2.991 Ovo 5.795 6.728 7.652 8.566 9.471 5.601 6.472 7.325 8.162 8.983 5.417 6.230 7.020 7.786 8.530 5.242 6.002 6.733 7.435 8.111 Present Value of Annuity of $1 5% 6% 8% 10% 12% 14% 0.952 0.943 0.926 0.909 0.893 0.877 1.859 1.833 1.783 1.736 1.690 1.647 2.723 2.673 2.577 2.487 2.402 2.322 3.546 3.465 3.312 3.170 3.037 2.914 4.329 4.212 3.993 3.791 3.605 3.433 5.076 4.917 4.623 4.355 4.111 3.889 5.786 5.582 5.206 4.868 4.564 4.288 6.463 6.210 5.747 5.335 4.968 4.639 7.108 6.802 6.247 5.759 5.328 4.946 7.722 7.360 6.710 6.145 5.650 5.216 8.306 7.887 7.139 6.495 5.938 5.453 8.863 8.384 7.536 6.194 5.660 9.394 8.853 7.904 7.103 6.424 5.842 9.899 9.295 8.244 7.367 6.628 6.002 10.380 9.712 8.559 7.606 6.811 6.142 12.462 11.470 9.818 8.514 7.469 6.623 14.094 12.783 10.675 9.077 7.8436.873 15.372 13.765 11.258 9.4278.055 7.003 17.159 15.046 11.925 9.779 | 8.244 7.105 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 6.814 10.368 11.255 12.134 13.004 13.865 9.787 10.575 11.348 12.106 12.849 9.253 9.954 10.635 11.296 11.938 8.760 9.385 9.986 10.563 11.118 5.029 5.197 5.342 5.468 5.575 4.656 4.793 4.910 5.008 4.327 4.439 4.533 4.611 4.675 5.092 18.046 16.351 14.877 13.590 22.023 19.523 | 17.413 15.622 25.808 22.396 19.600 17.292 32.835 27.355 23.115 19.793 5.929 5.353 6.097 5.467 6.1775.517 6.233 5.548 4.870 4.948 4.979 4.997 Print Done Reference Future Value of Annuity of $1 Periods 5% 1 I 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 1.000 2.050 3.153 4.310 5.526 6% 1.000 2.060 3.184 4.375 5.637 8% 1.000 2.080 3.246 4.506 5.867 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.066 6.877 18% 1.000 2.180 3.572 5.215 7.154 20% 1.000 2.200 3.640 5.368 7.442 6.152 7.214 8.286 9.369 10.462 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 7.336 8.923 10.637 12.488 14.487 7.716 9.487 11.436 13.579 15.937 8.536 10.730 13.233 16.085 19.337 8.977 11.414 14.240 17.519 21.321 9.442 12.142 15.327 19.086 23.521 9.930 12.916 16.499 20.799 25.959 6.308 7.434 8.583 9.755 10.950 12.169 13.412 14.680 15.974 17.293 6.468 7.662 8.892 10.159 11.464 12.808 14.192 15.618 17.086 18.599 6.975 8.394 9.897 11.491 13.181 14.972 16.870 18.882 21.015 23.276 18.531 21.384 11.567 12.683 13.809 14.947 16.097 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 24.523 16.645 18.977 21.495 24.215 27.152 45.762 73.106 113.283 259.057 8.115 10.089 12.300 14.776 17.549 20.655 24.133 28.029 32.393 37.280 72.052 133.334 241.333 767.091 23.045 27.271 32.089 37.581 43.842 25.733 30.850 36.786 43.672 51.660 115.380 249.214 530.312 2,360.757 28.755 34.931 42.219 50.818 60.965 32.150 39.581 48.497 59.196 72.035 22.019 28.243 34.785 48.886 24.297 32.030 40.568 60.402 26.870 36.459 47.575 75.401 29.778 41.646 56.085 95.026 33.066 47.727 66.439 120.800 27.975 31.772 57.275 98.347 164.494 442.593 36.786 54.865 79.058 91.025 181.871 356.787 1,342.025 146.628 186.688 342.603 471.981 790.948 1,181.882 4,163.213 7,343.858 Print Done i Reference Periods 38 3 8 Gia si o s 0 A N 4 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 2% 3% 0.9800.971 0.961 0.943 0.942 0.915 0.924 0.888 0.906 0.863 0.888 0.837 0.871 0.813 0.853 0.789 0.837 0.766 0.820 0.744 0.804 0.722 0.788 0.701 0.773 0.681 0.758 0.661 0.743 0.642 0.673 0.554 0.610 0.478 0.552 0.412 0.453 0.307 Present Value of $1 4% 5% 6% 8% 10% 0.9620.952 0.943 0.926 0.909 0.925 0.9070.890 0.8570.826 0.889 0.864 0.840 0.794 0.751 0.855 0.823 0.792 0.735 0.683 0.822 0.784 0.747 0.681 0.621 0.790 0.746 0.705 0.630 0.564 0.760 0.711 0.665 0.583 0.513 0.731 0.677 0.627 0.540 0.467 0.703 0.645 0.592 0.500 0.424 0.676 0.614 0.558 0.463 0.386 0.650 0.585 0.527 0.429 0.350 0.625 0.557 0.497 0.397 0.319 0.601 0.530 0.469 0.368 0.290 0.577 0.505 0.442 0.340 0.263 0.555 0.481 0.417 0.315 0.239 0.456 0.377 0.312 0.215 0.149 0.375 0.295 0.233 0.146 0.092 0.308 0.231 0.174 0,099 0.057 0.208 0.142 0.097 0.046 0.022 12% 14% 0.893 0.877 0.797 0.769 0.712 0.675 0.636 0.592 0.567 0.519 0.507 0.456 0.452 0.400 0.404 0.351 0.361 0.308 0.322 0.270 0.287 0.237 0.257 0.208 0.229 0.182 0.205 0.160 0.183 0.140 0.104 0.073 0.059 0.038 0.033 0.020 0.0110.005 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 18% 20% 0.847 0.833 0.7180.694 0.609 0.579 0.516 0.482 0.437 0.402 0.370 0.335 0.314 0.279 0.266 0.233 0.225 0.194 0.191 0.162 0.162 0.135 0.137 0.112 0.116 0.093 0.099 0.078 0.084 0.065 0.037 0.026 0.016 0.007 0.004 0.001 0.001 0.896 0.887 0.879 0.168 0.870 0.145 0.125 0.108 0.051 0.861 0.820 0.780 0.742 0.672 0.024 0.010 0.012 0.003 Print Done i Reference Future Value of $1 Periods 8% 1% 1.010 1.020 1.030 1.041 1.051 1.062 ovo AWNE 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 1.080 1.166 1.260 1.360 14% 1.140 1.300 1.482 1.689 1.925 6% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 18% 1.180 1.392 1.643 1.939 2.288 1.469 2% 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 1.072 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 1.083 1.094 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 2.653 3.386 4.322 7.040 1.105 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.358 2.594 2.853 3.138 3.452 3.797 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 2.191 2.666 3.243 4.801 12% 1.120 1.254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 4.661 6.848 10.063 21.725 2.195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7.138 16% 1.160 1.346 1.561 1.811 2.100 2.436 2.826 3.278 3.803 4.411 5.117 5.936 6.886 7.988 9.266 19.461 40.874 85.850 378.721 1.116 1.127 1.138 1.149 20% 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12.839 15.407 38.338 95.396 237.376 1,469.772 1.898 2.012 2.133 2.261 2.397 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 27.393 62.669 143.371 750.378 1.161 4.177 SMS 1.220 1.282 1.348 1.489 1.486 1.641 1.811 2.208 1.806 2.094 2.427 3.262 3.207 4.292 5.743 10.286 6.727 10.835 17.449 45.259 9.646 17.000 29.960 93.051 13.743 26.462 50.950 188.884 Print Print Done Done Requirements 1. What is the project's NPV? Is the investment attractive? Why or why not? 2. Assume the expansion has no residual value. What is the project's NPV? Is the investment still attractive? Why or why not? Print Done