Consider how Valley Park Lodge could use capital budgeting to decide whether the 12000000 Park Lodge expansion would be a good investment. Assume Valley's managers developed the following estimates concerning the expansion Number of additional skiers per day

Number of additional skiers per day

122 skiers

Average number of days per year that weather conditions allow skiing at Kyler Valley

149 days

Useful life of expansion (in years)

10 years

Average cash spent by each skier per day

$245

Average variable cost of serving each skier per day

83

Cost of expansion

12,000,000

Discount rate

8%