HWQ4

Consider how Preston Valley Stream Park Lodge could use capital budgeting to decide whethe E: (Click the icon to view the estimates.) 3. (Click the icon to view additional informal Read the requirements: Requirement 1. Will the payback change? Explain your answer. Recalculate the payback if it cha Select the formula to calculate the payback period: 00,000 Stream Park Lodge expansion would be a good investment. Assume Preston Valley's managers Round to one decimal place. 1. Will the payback chang changes. Round to one 2. Will the project's ARR C 3. Assume Preston Valley following decision criteri Maximum payback per Minimum accounting t Wil Preston Valley consi More info Under the assumption that the expansion would have a residual value of $600,000, the managers calculated the payback period to be 4.4 years, the ARR to be 20.25%, the average annual operating income to be $1.225.228. the average amount invested to be $6,050,000, and the average annual net cash inflow to be $2,587,728. Assume that Preston Valley uses the straight-line depreciation method and now expects the lodge expansion to have zoro residual value at the end of its eight-year life. a good investment. Assume Preston Valley's managers developed the following estimates concerning the expansion: Requirements 1. Will the payback change? Explain your answer. Recalculate the payback if it changes. Round to one decimal place. 2. Will the project's ARR change? Explain your answer. Recalculate ARR if it changes. Round to two decimal places. 3. Assume Preston Valley screens its potential capital investments using the following decision criteria: Will Preston Valley consider this project further or reject it? ey uses the straight-line depreciation method and now sion to have zero residual value at the end of its