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Robertson Resorts is considering whether to expand their Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available: Cost of expansion Discount rate Useful life Annual rental incone $3,220,000 20 $2,050,000 $1,600,000 Annual operating expenses Robertson uses straight-line depreciation and the lodge expansion will have a residual value of $2,640,000. Required: 1. Calculate the annual net operating income from the expansion. 2. Calculate the annual net cash inflow from the expansion. 3. Calculate the ARR. (Round your answer to 2 decimal places.) 4. Calculate the payback period. (Round your answer to 1 decimal place.) 5. Calculate the NPV. (Euture Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1) (Use apprepriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole

Robertson Resorts is considering whether to expand their Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available: Cost of expansion Discount rate Useful life Annual rental incone $3,220,000 20 $2,050,000 $1,600,000 Annual operating expenses Robertson uses straight-line depreciation and the lodge expansion will have a residual value of $2,640,000. Required: 1. Calculate the annual net operating income from the expansion. 2. Calculate the annual net cash inflow from the expansion. 3. Calculate the ARR. (Round your answer to 2 decimal places.) 4. Calculate the payback period. (Round your answer to 1 decimal place.) 5. Calculate the NPV. (Euture Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1) (Use apprepriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Robertson Resorts is considering whether to expand their Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available: Cost of expansion Discount rate $3,220,000 Useful life 20 Annual rental income Annual operating expenses $2,050,000 ॐ1, 600, 000 Robertson uses straight-line depreciation and the lodge expansion will have a residual value of $2,640,000. Required: 1. Calculate the annual net operating income from the expansion. 2. Calculate the annual net cash inflow from the expansion. 3. Calculate the ARR. (Round your answer to 2 decimal places.) 4. Calculate the payback period. (Round your answer to 1 decimal place.) 5. Calculate the NPV. (Future Value of $1. Present Value of S1, Euture Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) Answer is not complete. 450,000 474,167 O IS 1. Annual Operating Income 24 Annual Net Cash Inflow ARR 2. 13.98 3. 6.8 * years Payback Period NPV 4. * Prey 5 of 6 Next >
Transcribed Image Text:Robertson Resorts is considering whether to expand their Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available: Cost of expansion Discount rate $3,220,000 Useful life 20 Annual rental income Annual operating expenses $2,050,000 ॐ1, 600, 000 Robertson uses straight-line depreciation and the lodge expansion will have a residual value of $2,640,000. Required: 1. Calculate the annual net operating income from the expansion. 2. Calculate the annual net cash inflow from the expansion. 3. Calculate the ARR. (Round your answer to 2 decimal places.) 4. Calculate the payback period. (Round your answer to 1 decimal place.) 5. Calculate the NPV. (Future Value of $1. Present Value of S1, Euture Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) Answer is not complete. 450,000 474,167 O IS 1. Annual Operating Income 24 Annual Net Cash Inflow ARR 2. 13.98 3. 6.8 * years Payback Period NPV 4. * Prey 5 of 6 Next >
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