# Deer Valley Lodge, A Ski Resort

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 park 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?

• Posted: 7 days ago
Deer Valley Lodge, A Ski Resort

Purchase the answer to view it

Save time and money!
Our teachers already did such homework, use it as a reference!
• 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 …

• 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 …

• Rated 2 times

### Managerial Accounting

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 …

• Not rated

### Deer Valley

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 …

• Not rated

### Deer Valley Lodge, A Ski Resort

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 …

• Not rated

### Deer Valley Lodge, a ski resort in the Wasatch Mountains of Utah, has plans to eventually add

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 …

• Not rated

### Individual Project

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 …

• Not rated

### Deer Valley Lodge, a ski resort in the Wasatch Mountains of Utah, has plans to eventually add

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 …