Consider how Rouse Valley Stream Park Lodge could use capital budgeting to decide whether the $12,500,000 Stream Park Lodge expansion would be a good investment. Assume Rouse Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) (Click the icon to view additional information.) Read the requirements. Requirement 1. Will the payback change? Explain your answer. Recalculate the payback if it changes. Round to one decimal place. Select the formula to calculate the payback period. Payback

mavagers dereloped the folowing eidmates concheting the eaparsiot. [Cick the con 10 vipit the entiules] (Gick the toon la view addbondintoremation) Feas the foquichents Folect the formica to calcuiese the poptack perod to cal Number of additional skiers per day 116 skiers Average number of days per year that weather conditions 148 days allow skiing at Rouse Valley Useful life of expansion (in years) 10 years Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion Discount rate Discountrate 2477912,500,00010% Under the assumption that the expansion would have a residual value of $600,000, the managers calculated the payback period to be 4.3 years, the ARR to be 25.87%, the average annual operating income to be $1,694,224, the average amount invested to be $6,550,000, and the average annual net cash inflow to be $2,884,224. Assume that Rouse Valley uses the straight-line depreciation method and now expects the lodge expansion to have zero residual value at the end of its ten-year life. 1. Will the payback change? Explain your answer. Recalculate the payback if it changes. Round to one decimal place. 2. Will the project's ARR change? Explain your answer. Recalculate ARR if it changes. Round to two decimal places. 3. Assume Rouse Valley screens its potential capital investments using the following decision criteria: Will Rouse Valley consider this project further or reject it