Consider how Smith Valley Brook Park Lodge could use capital budgeting to decide whether the $12,000,000 Brook Park Lodge expansion would be a good investment. Assume Smith Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) (Click the icon to view additional information.) The internal rate of return (IRR) of the expansion is The project is since it will earn a return than the company's 8% hurdle rate. 114 skiers 146 days 10 years Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Smith 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 $ 239 87 12,000,000 8% Assume that Smith Valley uses the straight-line depreciation method and expects the lodge expansion to have no residual value at the end of its ten-year life. The project is expected to have an average annual net cash inflow of $2,529,888. The NPV of the expansion is expected to be $4,975,548