Refer to the Stenback Valley Snow Park Lodge expansion project in Short Exercise S26 4. What is the project’s NPV (round to nearest dollar)? Is the investment attractive? Why or why not?
Number of additional skiers per day.............................................. 116 skiers
Average number of days per year that weather conditions
allow skiing at Stenback Valley.................................................. 143 days
Useful life of expansion (in years)................................................. 8 years
Average cash spent by each skier per day..................................... $ 244
Average variable cost of serving each skier per day..................... 82
Cost of expansion..........................................................................11,000,000
Discount rate................................................................................. 12%