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

profileworkingman

Must be on excel spread sheet and show all caculations

 

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.

  1. 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.
  2. 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.
  3. What subjective factors would affect the investment decision?

You can view a present value table here.

    • Posted: 5 years ago
    • Due: 
    • Budget: $35
    Answers 5

    Purchase the answer to view it

    blurred-text

    Purchase the answer to view it

    blurred-text

    Purchase the answer to view it

    blurred-text

    Purchase the answer to view it

    blurred-text

    Purchase the answer to view it

    blurred-text
    • Rated 1 times

      ACCT 310

      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 …

    • Rated 2 times

      For Asma

      Unit 5 Individual Project

      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 …

    • Deliverable length is 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 …

    • Rated 2 times

      stat

    • Rated 2 times

      acct 310

      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 …

    • 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 …

    • Rated 2 times

      Accounting 5

      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 …

    • Rated 2 times

      Deer Valley Lodge

      Deer Valley Lodge Scenario

      Deliverable Length: 1 page and 1 Excel Spreadsheet

      Consider the following scenario:

      Deer Valley Lodge, a ski resort in the Wasatch …

    • 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 …

    • 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 …