Take a Load Off Hotels is considering the construction of a new hotel for $40 million. The expected life of the hotel is 20 years with no residual value. The hotel is expected to earn revenues of $7.5 million per year. Total expenses, including straight-line depreciation, are expected to be $3 million per year. Take a Load Off's management has set a minimum acceptable rate of return of 10%. Round all computations and your final answer to one decimal place.

Calculate the net present value of the new hotel, using the present value factor of an annuity of $1 at 10% for 20 periods of 8.5136.

		(in millions, except present value factor)
Annual net cash flow		$fill in the blank 2
Present value of an annuity of $1 at 10% for 20 periods	x	8.5136
Present value of hotel project cash flows		$fill in the blank 3
Less hotel construction costs		fill in the blank 4
Net present value of hotel project		$fill in the blank 5