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Amount invested / Expected annual net cash flow / Expected useful life

Data Table 115 skiers Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Preston 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 150 days 8 years 242 86 12,000,000 8% Consider how Preston Valley Stream Park Lodge could use capital budgeting to decide whether the $12,000,000 Stream Park Lodge expansion would be a good investment. Assume Preston Valley's managers developed the following estimates concerning the expansion: (Click the icon to view the estimates.) Assume that Preston 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 net cash inflow from the expansion is expected to be $2,691,000. Compute the payback for the expansion project. Round to one decimal place. Payback years / =