# Consider how McKnight Valley River Park Lodge could use capital budgeting to decide whether the \$13,000,000…

Consider how McKnight Valley River Park Lodge could use capital budgeting to decide whether the \$13,000,000 River Park Lodge expansion would be a good investment. Assume Mcknight Valley’s managers developed the following stimates concerning the expansion (Click the icon to view the estimates) Read the requirements XIANbozo e Requirement 1. Compute the average annual net cash inflow from the expansion Data Table – The average annual net cash inflow from the expansion is 120 skiers 150 days Number of additional skiers per day Average number of days per year that weather conditions allow skiing at McKnight Valley Useful life of expansion in years) Average cash spent by each skier per day Average vanable cost of serving each skier per day Cost of expansion Discount rate \$ 246 75 13.000.000 Assume that Mcknight Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of \$850,000 at the end of its nine-year life Tiger Requirements Print Done 1. Compute the average annual net cash inflow from the expansion 2. Compute the average annual operating income from the expansion Print Done Consider how Smith Valley Waterfal Park Lodge could use capital budgeting to decide whether the \$11,000,000 Waterfal Park Lodge expansion would be a good investment. Assume Smith Valley’s managers developed the following estimates concerning the expansion (Click the icon to view the estimates.) Assume that Smith Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of \$750,000 at the end of its ten-year life. The average annual net cash inflow from the expansion is expected to be \$2.694.450. Compute the payback for the expansion project. Round to one decimal place MNAAPUR Payback years Amount invested Expected annual net cash inflow Expected useful life Data Table – 115 skers Tiger Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Smith Valley Useful life of expansion in years) Average cash spent by each skler per day Average variable cost of serving each skier per day Cost of expansion Discount rate \$ 142 days 10 years 244 79 11,000,000 10% Print Done Payback years Data Table _ 115 skiers Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Smith Valley Useful life of expansion (in years) Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion Discount rate 142 days 10 years 244 79 11,000,000 10% Print Done Consider how Preston Valley Stream Park Lodge could use capital budgeting to decide whether the \$13,000,000 Stream Park Lodge expansion would be a good investment. Assume Preston Valley’s managers developed the following estimates concerning the expansion (Click the icon to view the estimates) Assume that Preston Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of \$1,000,000 at the end of its ten-year life. The average annual operating income from the expansion is \$1.687.620 and the depreciation has been calculated as \$1.200.000, Calculate the ARR. Round to two decimal places ARR Data Table – 114 skiers 149 days 10 years T_r Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Preston Valley Useful life of expansion (in years) Average cash spent by each skler per day Average variable cost of serving each skier per day Cost of expansion Discount rato \$ 245 75 13,000,000 10% Print Done