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It is the beginning of September and you have been offered the following deal to go heli - skiing. If you pick the first week
It is the beginning of September and you have been offered the following deal to go heliskiing. If you pick the first week
in January and pay for your vacation now, you can get a week of heliskiing for $ However, if you cannot ski
because the helicopters cannot fly due to bad weather, there is no snow, or you get sick, you do not get a refund. There
is a probability that you will not be able to ski. If you wait until the last minute and go only if you know that the
conditions are perfect and you are well, the vacation will cost you $ You estimate that the pleasure you get
from heliskiing is worth $ per week to you if you had to pay more than that, you would choose not to go If your
cost of capital is per year, should you book ahead or wait?
You should
because the NPV of this choice is $Round to two decimal places.
book ahead
wait
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