Internal Rate of Return Method for a Service Company

Vail Resorts, Inc. $($MTN$),$ announced a $$757,000$ million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $$200,000$ million in equal annual cash flows for each of the first $6$ years of the project

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

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a$.$ Determine the expected internal rate of return of this project for $6$ years.

$\%$

b$.$ Identify the uncertainties that could reduce the internal rate of return of this project?

Warm weather conditions, or no snow

Recessionary economic conditions that reduce the demand for ski holidays

Competitor property improvements that siphon demand from the project

Increased fuel costs that increase the cost of travel to ski resorts, thus reducing demand from nonlocal patrons Industry overbuilding that causes a price war to maintain volume

All of these

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