Welcome Inn Hotels is considering the construction of a new hotel for $$70$ million. The expected life of the hotel is $10$ years with no residual value. The hotel is expected to earn revenues

of $$19$ million per year. Total expenses, including depreciation, are expected to be $$14$ million per year. Welcome Inn management has set a minimum acceptable rate of return of $10\%.$

Assume straight$-$line depreciation.

a$.$ Determine the equal annual net cash flows from operating the hotel. Round to the nearest million dollars.

$

million

Present Value of an Annuity of $$1$ at Compound Interest

b$.$ Calculate the net present value of the new hotel, using the present value of an annuity of $$1$ table above. Round to the nearest million dollars. If required, use the minus sign to

indicate a negative net present value.