Consider how Root Valley Spring Park Lodge could use capital budgeting to decide whether the $13,000,000 Spring Park Lodge expansion would be a good investment. Assume

Root Valley's managers developed the following estimates concerning the expansion:

Assume that Root Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $500,000 at the end of its

eight-year life. The average annual operating income from the expansion is $1,530,548 and the depreciation has been calculated as 1,562,500.

Calculate the ARR. Round to two decimal places.

Data Table 119 skiers Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Root 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 152 days 8 years 246 75 13,000,000 8%