Consider how Pine Valley, a popular ski resort, could use capital budgeting to decide whether the $9 million Waterfall Park Lodge expansion would be a good investment. (Click the icon to view the expansion estimates.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) Read the requirements. (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) 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 Pine Valley's managers developed the following estimates concerning a planned expansion to its Waterfall Park Lodge (all numbers assumed): Number of additional skiers per day.... - 118 Average number of days per year that weather conditions allow skiing at Pine Valley..... 164 Useful life of expansion (in years)..... 10 Average cash spent by each skier per day. . . . . . . . $ 245 Average variable cost of serving each skier per day . $ 135 Cost of expansion.... Discount rate..... Assume that Pine Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $600,000 at the end of its ten-year life. It has already calculated the average annual net cash inflow per year to be $2,128,720. $ 9,000,000 10% Print Done Reference Present Value of Annuity of $1 Periods 1% 2% 3% 4% Period 1 0.990 Period 2 1.970 Period 3 2.941 Period 4 3.902 Period 5 4.853 Period 6 5.795 Period 7 6.728 Period 8 7.652 5% 6% 8% 10% 12% 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 14% 16% 18% 0.877 0.862 1.647 1.605 20% 0.847 0.833 1.566 1.528 2.322 2.246 2.174 2.106 2.914 2.798 2.690 2.589 3.433 3.274 3.127 2.991 5.601 5.417 5.242 5.076 6.472 6.230 6.002 5.786 7.325 7.020 6.733 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 5.582 5.206 4.868 4.564 6.463 6.210 5.747 4.288 5.335 4.968 4.639 4.344 4.078 4.039 3.812 3.605 3.837 Period 9 8.566 Period 10 9.471 8.162 7.786 7.435 7.108 6.802 8.983 8.530 8.111 6.247 5.759 5.328 4.946 4.607 4.303 4.031 7.722 7.360 6.710 6.145 | 5.650 5.216 4.833 4.494 4.192 Period 11 10.368 9.787 9.253 8.760 8.306 Period 12 11.255 10.575 9.954 9.385 8.863 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 Period 30 25.808 22.396 19.600 17.292 15.372 13.765| 11.258 9.427 8.055 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 6.873 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 8.384 7.536 6.814 | 6.194 5.660 5.197 4.793 4.439 5.842 5.342 4.910 4.533 6.002 5.468 5.008 4.611 6.142 5.575 5.092 4.675 6.623 5.929 5.353 4.870 6.097 5.467 4.948 7.003 6.177 5.517 4.979 7.105 6.233 5.548 4.997 Print Done - Reference Future Value of Annuity of $1 - Periods Period 1 1% 2% 3% 4% 5% 1.000 1.000 1.000 1.000 6% 8% 1.000 1.000 1.000 1.000 10% 12% 14% 16% 18% 20% 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2.020 2.030 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Period 4 4.060 4.122 4.184 4.246 4.310 4.375 4.506 4.641 4.779 4.921 5.066 5.215 5.368 Period 5 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 Period 6 6.152 6.308 6.468 6.633 6.802 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 Period 7 7.214 7.434 7.662 7.898 8.142 8.394 Period 8 8.286 Period 9 9.369 9.755 10.159 10.583 Period 10 10.462 10.950 11.464 12.006 8.583 8.892 9.214 9.549 9.897 8.923 9.487 10.637 11.436 12.300 11.027 11.491 12.488 13.579 14.776 12.578 13.181 14.487 15.937 17.549 10.089 10.730 11.414 12.142 12.916 13.233 14.240 15.327 16.499 16.085 17.519 19.086 20.799 19.337 21.321 23.521 25.959 Period 11 Period 12 Period 13 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 12.683 13.412 14.192 15.026 15.917 16.870 18.977 21.384 24.133 13.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 28.029 Period 14 14.947 15.974 17.086 18.292 19.599 21.015 24.215 27.975 32.393 Period 15 16.097 17.293 18.599 20.024 21.579 23.276 27.152 31.772 37.280 43.842 Period 20 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025 Period 25 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 Period 30 34.785 40.568 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 1,181.882 Period 40 48.886 60.402 | 75.401 | 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757 4,163.213 7,343.858 23.045 25.733 27.271 28.755 32.150 30.850 34.931 39.581 32.089 36.786 42.219 48.497 37.581 43.672 50.818 59.196 51.660 60.965 72.035 115.380 146.628 186.688 342.603 471.981 Print Done Reference Present Value of $1 Periods 1% 2% 3% 4% Period 1 0.990 0.980 0.971 0.962 Period 2 0.980 0.961 0.943 0.925 Period 3 Period 4 0.971 0.942 0.915 0.889 0.864 0.961 0.924 0.888 0.855 0.823 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.681 0.621 0.567 0.519 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 Period 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 Period 13 0.879 0.773 0.681 Period 14 0.870 0.758 Period 15 0.861 0.743 0.601 0.530 0.469 0.368 0.290 0.661 0.577 0.505 0.442 0.340 0.263 0.642 0.555 0.481 0.417 0.315 0.239 0.287 0.237 0.195 0.162 0.135 0.257 0.208 0.168 0.137 0.112 0.229 0.182 0.145 0.116 0.093 0.205 0.160 0.125 0.099 0.078 0.183 0.140 0.108 0.084 0.065 Period 20 0.820 Period 25 0.780 Period 30 0.742 0.673 0.610 0.552 Period 40 0.672 0.453 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 0.004 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 0.037 0.026 Print Done - Reference Future Value of $1 Periods 1% 2% 3% 4% 5% Period 1 1.010 1.020 1.030 1.040 Period 2 1.020 1.040 1.061 1.082 Period 3 1.030 1.061 1.093 1.125 1.158 Period 4 1.041 1.082 1.126 1.170 1.216 1.262 6% 8% 10% 12% 14% 1.050 1.060 1.080 1.100 1.120 1.103 1.124 1.166 1.210 1.254 1.191 1.260 1.331 1.405 1.360 16% 18% 20% 1.140 1.160 1.180 1.200 1.300 1.346 1.392 1.440 1.482 1.561 1.643 1.728 Period 5 1.051 1.104 1.159 1.217 1.276 1.338 1.464 1.574 1.689 1.811 1.469 1.611 1.762 1.925 1.939 2.074 2.100 2.288 2.488 Period 6 1.062 1.126 1.194 1.265 1.340 1.419 1.587 1.772 1.974 Period 7 1.072 1.149 1.230 1.316 1.407 1.504 1.714 2.195 1.949 2.211 2.502 2.826 3.185 2.436 2.700 2.986 3.583 Period 8 1.083 1.172 1.267 1.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 3.759 4.300 Period 9 1.094 1.195 1.305 1.423 1.551 1.689 1.999 Period 10 1.105 1.219 1.344 1.480 1.629 1.791 2.159 2.358 2.773 2.594 3.106 3.252 3.803 4.435 5.160 3.707 4.411 5.234 6.192 Period 11 1.116 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 Period 12 1.127 1.268 1.426 1.601 1.796 2.012 2.518 3.138 Period 13 1.138 1.294 1.469 1.665 1.886 2.133 2.720 3.452 4.363 Period 14 1.149 1.319 1.513 1.732 1.980 2.261 2.937 3.797 4.887 3.896 4.818 5.936 7.288 8.916 5.492 6.886 8.599 10.699 6.261 7.988 10.147 12.839 Period 15 1.161 1.346 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 Period 20 1.220 1.486 1.806 2.191 Period 25 1.282 1.641 Period 40 Period 30 1.348 1.489 1.811 2.208 2.653 3.207 2.094 2.666 3.386 4.292 2.427 3.243 4.322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 3.262 4.801 7.040 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1,469.772 4.661 6.727 9.646 13.743 19.461 27.393 38.338 6.848 10.835 17.000 26.462 40.874 62.669 95.396 Print 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