Question
Consider how Rouse Valley Stream Park Lodge could use capital budgeting to whether the $11,500,000 Stream Park Lodge expansion would be a good investment. Assume
Consider how Rouse Valley Stream Park Lodge could use capital budgeting to whether the $11,500,000 Stream Park Lodge expansion would be a good investment. Assume Rouse Valley's managers develop the following estimates concerning the expansion.
Number of additional skiers per day: 114 skiers
Average number of days per year that weather conditions allow skiing at Rouse Valley: 144 days
Useful life of expansion (in years): 8 years
Average cash spent by each skier per day: $244
Average variable cost of serving each skier per day: 81
Cost of expansion: 11,500,000
Discount rate: 10%
Compute the payback for the expansion project. Round to one decimal place.
Requirement 1= List the formula for Payback
/ | = | Payback |
Requirement 2= What is the payback in years (Show all work)?
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