Consider how Hope Valley, a popular ski resort, could use capital budgeting to decide whether the $8.5 million Autumn Park Lodge expansion would be a good investment.

Assume that Hope Valley's managers developed the following estimates concerning a planned expansion to its Autumn Park Lodge (all numbers assumed):

Number of additional skiers per day. . . . . . . . . . . . . . . . .	124
Average number of days per year that weather conditions allow skiing at Hope Valley. . . . . . . . .	163
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. . . .	$136
Cost of expansion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$8,500,000
Discount rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12%

Assume that Hope 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 $2,182,896.

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 $