E11-14 (Algo) Calculating ARR, Payback Period and NPV [LO 11-1, 11-2, 11-3] Robertson Resorts is considering whether to expand their Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available: Cost of expansion Discount rate Useful life Annual rental income Annual operating expenses $3,580,000 9% 20 $1,450,000 $1,000,000 Robertson uses straight-line depreciation and the lodge expansion will have a residual value of $2,160,000. Required: 1. Calculate the annual net operating income from the expansion. 2. Calculate the annual net cash inflow from the expansion. 3. Calculate the ARR. (Round your answer to 2 decimal places.) 4. Calculate the payback period. (Round your answer to 1 decimal place.) 5. Calculate the NPV. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) Answer is complete but not entirely correct. 1. $ Annual Operating Income Annual Net Cash Inflow ARR 450,000 521,000 2. $ 3. 39.58 X % 4. Payback Period NPV 2.3 x years 638,784 X 5 $