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Consider how Rouse Valley Brook Park Lodge could use capital budgeting to decide whether the...

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Accounting

Consider how Rouse Valley Brook Park Lodge could use capital budgeting to decide whether the
$12,500,000 Brook Park Lodge expansion would be a good investment. Assume Rouse Valley's
managers developed the following estimates concerning the expansion:
(Click the icon to view the estimates.)
(Click the icon to view additional information.)
(Click the icon to view Present Value of $1 table.)
(Click the icon to view Present Value of Ordinary Annuity of $1 table.)
What is the project's NPV (round to nearest dollar)? Is the investment attractive? Why or
why not?
Calculate the net present value of the expansion. (Enter any factor amounts to three decimal places,
X.XXX. Round to the nearest whole dollar.)
Data table
More info
Assume that Rouse Valley uses the straight-line depreciation method and expects
the lodge expansion to have a residual value of $600,000 at the end of its
seven-year life. They have already calculated the average annual net cash inflow
per year to be $2,948,160.
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