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Robertson Resorts is considering whether to expand its Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available. $ 3,110,000 Cost of expansion Discount rate Useful life Annual rental income Annual operating expenses Robertson uses straight-line depreciation and the lodge expansion will have a residual value $2,720,000. 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 Note: Round your answer to 2 decimal places. 20 $ 2,150,000 $ 1,700,000 4. Calculate the payback period. Note: Round your answer to 1 decimal place. 5. Calculate the NPV, Euture Value of $1,Present Value of $1. Fumure Value Annulty of $1, Present Value Annulty of $1) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. voual Operatin

Robertson Resorts is considering whether to expand its Pagosa Springs Lodge. The expansion will create 24 additional rooms for rent. The following estimates are available. $ 3,110,000 Cost of expansion Discount rate Useful life Annual rental income Annual operating expenses Robertson uses straight-line depreciation and the lodge expansion will have a residual value $2,720,000. 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 Note: Round your answer to 2 decimal places. 20 $ 2,150,000 $ 1,700,000 4. Calculate the payback period. Note: Round your answer to 1 decimal place. 5. Calculate the NPV, Euture Value of $1,Present Value of $1. Fumure Value Annulty of $1, Present Value Annulty of $1) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. voual Operatin

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Robertson Resorts is considering whether to expand its 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 income Annual operating expenses Robertson uses straight-line depreciation and the lodge expansion will have a residual value $2,720,000. $ 3,110,000 innual Operating Income 2. Annual Nel Cash Infow 3. ARR 4. Payback Period 5. NPV 8% 28 $ 2,150,000 $ 1,700,000 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 Note: Round your answer to 2 decimal places. 4. Calculate the payback period. Note: Round your answer to 1 decimal place. 5. Calculate the NPV. (Future Value of $1,Present Value of $1. Future Value Annuity of $1, Present Value Annulty of S1) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. % years
Transcribed Image Text:Robertson Resorts is considering whether to expand its 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 income Annual operating expenses Robertson uses straight-line depreciation and the lodge expansion will have a residual value $2,720,000. $ 3,110,000 innual Operating Income 2. Annual Nel Cash Infow 3. ARR 4. Payback Period 5. NPV 8% 28 $ 2,150,000 $ 1,700,000 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 Note: Round your answer to 2 decimal places. 4. Calculate the payback period. Note: Round your answer to 1 decimal place. 5. Calculate the NPV. (Future Value of $1,Present Value of $1. Future Value Annuity of $1, Present Value Annulty of S1) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. % years
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