Requirements

1.	Compute the average annual net cash inflow from the expansion.
2.	Compute the average annual operating income from the expansion.
3.	Compute the payback period.
4.	Compute the ARR.

Consider how Pine Valley, a popular sl-ci resort, could use capital budgeting to decide whether the $8.5 million Autumn Park Lodge expansion would be a good investment. {Click the icon to view the expansion estimates.) Assume that Pine Valle}.r uses the straightline depreciation method and expects the lodge expansion to have a residual value of $500,000 at the end of its tenyear life. Read the Requirement 1. Compute the average annual net cash inow from the expansion. First enter the formula, then compute the average annual net cash inow from the expansion. {Round your answer to the nearest dollar.) Average annual I x net cash inflow lx=ll X Data Table Assume that Pine Valley's managers developed the following estimates concerning a planned expansion to its Autumn Park Lodge (all numbers assumed): Number of additional skiers per day . . . . . . . . . . . . 118 Average number of days per year that weather conditions allow skiing at Pine Valley . . . . . .. . . ... 159 Useful life of expansion (in years) . . . . . . . . 10 Average cash spent by each skier per day . . . . . . . $ 235 Average variable cost of serving each skier per day . $ 135 Cost of expansion . . . . $ 8,500,000 Discount rate 12% Print Done