Consider how Monterey Snow Park Lodge could use capital budgeting to decide whether a $12,000,000 lodge...

Transcribed Image Text:

Consider how Monterey Snow Park Lodge could use capital budgeting to decide whether a $12,000,000 lodge expansion would be a good investment. Assume Monterey Snow Park Lodge's managers developed the following estimates concerning the expansion: View the estimates. Assume that Monterey Snow Park Lodgeuses the straight-line depreciation method and expects the lodge expansion to have a residual value of $500,000at the end of its 10ear The average annual operating income from the expansion is $1,613,894and the depreciation has been calculated as $1,150,000 Calculate the ARR. Round to two decimal places. Average annual operating income 1,613,894 Average amount invested ARR Points: 0 of 7 Consider how Monterey Snow Park Lodge could use capital budgeting to decide whether a $12,000,000 lodge expansion would b Monterey Snow Deck Ladasie mensesse develesed the following View the esti Assume that The average Calculate the Estimates to have a re $1,150,000. Number of additional skiers per day 119 skiers Average number of days per year that weather conditions allow skiing at Monterey Snow Park Lodge 147 days Average a Useful life of expansion (in years) 10 years Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion 242 % 84 12,000,000 8% Discount rate Print Done Consider how Monterey Snow Park Lodge could use capital budgeting to decide whether a $12,000,000 lodge expansion would be a good investment. Assume Monterey Snow Park Lodge's managers developed the following estimates concerning the expansion: View the estimates. Assume that Monterey Snow Park Lodgeuses the straight-line depreciation method and expects the lodge expansion to have a residual value of $500,000at the end of its 10ear The average annual operating income from the expansion is $1,613,894and the depreciation has been calculated as $1,150,000 Calculate the ARR. Round to two decimal places. Average annual operating income 1,613,894 Average amount invested ARR Points: 0 of 7 Consider how Monterey Snow Park Lodge could use capital budgeting to decide whether a $12,000,000 lodge expansion would b Monterey Snow Deck Ladasie mensesse develesed the following View the esti Assume that The average Calculate the Estimates to have a re $1,150,000. Number of additional skiers per day 119 skiers Average number of days per year that weather conditions allow skiing at Monterey Snow Park Lodge 147 days Average a Useful life of expansion (in years) 10 years Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion 242 % 84 12,000,000 8% Discount rate Print Done