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4. Consider how Frost Valley, a popular ski resort, could use capital budgeting to decide whether the $8.5 million Snow Park Lodge expansion would be a good investment. 1(Click the icon to view the expansion estimates.) Assume that Frost Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $950,000 at the end of its ten-year life. Read the requirements Requirement 1. Compute the average annual net cash inflow from the expansion. First enter the formula, then compute the average annual net cash inflow from the expansion. (Round your answer to the nearest dollar.) Average annual (1) (2) net cash inflow X Requirement 2. Compute the average annual operating income from the expansion. First enter the formula, then compute the average annual operating income from the expansion. (Round your answer to the nearest dollar.) Average annual operating income from asset (3) (4) Requirement 3. Compute the payback period. First enter the formula, then compute the payback period. (Enter amounts in dollars, not millions. Round your answer to two decimal places.) (5) (6) Payback period years Requirement 4. Compute the ARR. First enter the formula, then compute the accounting rate of return. (Enter amounts in dollars, not millions. Enter your answer as a percent rounded to two decimal places.) First enter the formula, then compute the accounting rate of return. (Enter amounts in dollars, not millions. Enter your answer as a percent rounded to two decimal places.) Accounting (7) (8) = rate of return % 1: Data Table Assume that Frost Valley's managers developed the following estimates concerning a planned expansion to its Snow Park Lodge (all numbers assumed): 120 164 10 Number of additional skiers per day.. Average number of days per year that weather conditions allow skiing at Frost 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. $ 244 $ 144 $ 8,500,000 12% Discount rate .. 2: Requirements 1. 2. Compute the average annual net cash inflow from the expansion. Compute the average annual operating income from the expansion. Compute the payback period. Compute the ARR. 3. 4. (1) (2) O Accumulated depreciation O Annual depreciation expense Average net cash inflow per day O Initial investment O Number of ski days per year Total net cash inflow OOOO Accumulated depreciation Annual depreciation expense O Average net cash inflow per day O Initial investment O Number ski days per year Total net cash inflow (3) (4) Initial investment O Total net cash inflow Initial investment O Total net cash inflow O Accumulated depreciation O Annual depreciation expense O Average annual net cash inflow Accumulated depreciation Annual depreciation expense O Average annual net cash inflow O Total net cash inflows O Total net cash inflows (5) O O Accounting rate of return O Expected annual net cash inflow O Future value O Initial investment Net present value O Present value O Residual value (6) O O Accounting rate of return O Expected annual net cash inflow O Future value O Initial investment Net present value O Present value O Residual value (7) (8) O Accounting rate of return O Accumulated depreciation O Annual depreciation Average annual net cash inflow Average annual operating income from asset O Expected annual net cash inflow O Initial investment O Future value O Initial investment O Net present value Present value O Residual value Total cash inflows

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