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Consider how Smith Valley River Park Lodge could use capital budgeting to decide whether the $11,000,000 River Park Lodge expansion would be a good
Consider how Smith Valley River Park Lodge could use capital budgeting to decide whether the $11,000,000 River 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.) Assume that Smith Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $850,000 at the end of its eight-year life. The average annual operating income from the expansion is $1,275,298 and the depreciation has been calculated as $1,268,750 Calculate the ARR Round to two decimal places. CID ARR Data table 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 117 skiers 144 days 8 years $ 236 Average variable cost of serving each skier per day 85 Cost of expansion 11,000.000 8% Discount rate Print Done
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