I I $amne$ eding all $ll$ vairable and fixe need all varoI You work for a venture capitalist and have been asked $to$ analyze a proposal from a group $of$

investors interested $in$ building a new ski area $in$ Colorado, the Stardust Canyon Ski Resort. The

demand for skiing $is$ growing. Existing ski resorts have raised prices and reported record profits

for the last two seasons. Stardust Canyon$s$ business strategy $isto$ offer the ultimate ski experience $-$ short lift lines, uncongested ski slopes and spectacular scenery. With $a2500-$foot vertical drop, $10$ trails, and a single triple three person ski lift, $it$ can provide a very ncongested ski resort. The resort will have a triple$-$person ski lift. The planned triple$-$person

ski lift delivers a chair every $20$ seconds, $180$ chairs per hour $3$ chairs per minute $X60$ minutes per hour, $or540$ skiers per hour $180$ chairs per hour $X3$ skiers per chair. This puts $an$ average $of$ only $54$ skiers per hour $on$ each $of$ the $10$ trails. Some trails will $be$ more popular than others, but this average number $of$ skiers per trail per hour $is$ still below industry average.

The cost $to$ build the ski runs, parking lots, and buildings and $to$ erect the chair lift $is$ $$52$ million.

$To$ raise this amount $of$ capital requires $an$ annual financing cost debt service$*$ and dividends

$of$ $$8\mathrm{.}3$ million. The annual fixed operating cost land lease, utilities, labor, taxes, insurance $of$ the ski resort $is$ projected $tobe$ $$4\mathrm{.}1$ million. For each $100$ skiers per day, additional employees must $be$ hired $to$ staff the ticket office, ski patrol, parking lots and $so$ forth. The daily cost $of$ the

additional labor $is$ $$200$ per $100$ skiers per day. The typical skier makes two ski runs per day uses the lift twice. Ski resorts operate their lifts $8$

hours per day, $120$ days per year. Stardust Mountain plans $to$ sell one$-$day lift tickets for $$60$ per skier per day: $No$ season passes will $be$ offered.

Identify the Fixed and Variable costs in this case list the cost name, the amounts, and the total of fixed cost and total for variable costs. Note for costs, you will use cash flows and not expenses $-$ in other words, you will not need to compute depreciation

Assuming each skier utilizes the chair lift twice a day $($as stated in the case$),$ how many

skier days are needed to break$-$even? $($be sure to clearly show your computations and

label your numbers$).($Note that you MUST use cell formulas. A user should be able to

utilize your spreadsheet using $$what$-$if$$ analysis and have your spreadsheet

automatically compute the answer. For example, if I change one of the variables,

$($revenue per skier for example$)$ your spreadsheet should show a new break$-$even

amount$).$

$3.$ Maximum cash flow and Return on Investment

a$)$ Compute the maximum yearly cash flow possible for the ski resort based upon

the information given for capacity.

b$)$ Based upon the maximum cash flow, compute the annual return on the initial

investment. $($use the cash flow for your return$).$

$4.$ Identify what additional information you need beyond what is provided by the case. $($I

have had people actually get some of the additional information by providing their own

research and apply it to the case. You will receive extra credit commensurate to the

usefulness of this research if you include it$.$ You must supply reference links or a copy

of the research