Get perfect grades by consistently using our writing services. Place your order and get a quality paper today. Take advantage of our current 20% discount by using the coupon code GET20
Order a Similar Paper Order a Different Paper
DELIVERY LENGTH- 1 PAGE AND 1 EXCEL SPREADSHEET
Consider the following scenario:
Deer Valley Lodge, a ski resort in the Wasatch Mountains of Utah, has plans to eventually add five new chairlifts. Suppose that one lift costs $2 million, and preparing the slope and installing the lift costs another $1.3 million. The lift will allow 300 additional skiers on the slopes, but there are only 40 days a year when the extra capacity will be needed. (Assume that Deer Valley Lodge will sell all 300 lift tickets on those 40 days.) Running the new lift will cost $500 a day for the entire 200 days the lodge is open. Assume that the lift tickets at Deer Valley cost $55 a day. The new lift has an economic life of 20 years.
- Assume that the before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer.
- Assume that the after-tax required rate of return for Deer Valley is 8%, the income tax rate is 40%, and the MACRS recovery period is 10 years. Compute the after-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer.
- What subjective factors would affect the investment decision?
You can view a present value table here http://www.flexstudy.com/demo/demopdf/96019_appendix.pdf
Got stuck with another paper? We can help! Use our paper writing service to score better grades and meet your deadlines.
Get 15% discount for your first order
Order a Similar Paper Order a Different Paper
