Robertson Resorts is considering whether to expand its 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 Robertson uses straight-line depreciation and the lodge expansion will have a residual value $2,560,000. 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. Note: Round your answer to 2 decimal places. 1. Annual Operating Income 2. Annual Net Cash Inflow 3. ARR 4. Payback Period 5. NPV $ 450,000 $ 3,502,000 $ 3,180,000 4. Calculate the payback period. Note: Round your answer to 1 decimal place. 5. Calculate the NPV. (Future Value of $1Present Value of $1 Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. 14.15% 10% 20 $ 1,950,000 $ 1,500,000 6.6 years

Robertson Resorts is considering whether to expand its Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are avallable: Robertson uses straight-line depreciation and the lodge expansion will have a residual value $2,560,000. 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. Note: Round your answer to 2 decimal places. 4. Calculate the payback period. Note: Round your answer to 1 decimal place. 5. Calculate the NPV. (Future Value of \$1iPresent Value of \$1: Future Value Annulty of \$1. Present Value Annulty of \$1.) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. TABLE 11.1A Future Value of $1 TABLE 11.2A Present Value of $1 TABLE 11.3A Future Value of an Annuity of \$1 TABLE 11.4A Present Value of Annuity of $1