Question
The Mount Hood Ski Resort is looking to expand its facilities by adding a new ski lift. The initial investment would cost $2,500,000 and would
The Mount Hood Ski Resort is looking to expand its facilities by adding a new ski lift. The initial investment would cost $2,500,000 and would increase annual expenses by $75,000. The new lift would have a useful life of 10 years and a salvage value of $25,000. The increase in skiing capacity would boost revenues by adding 5,000 skiers per year, paying an average of $100 for a lift ticket. The relevant discount rate for Mt. Hood Ski Resort is 6% and they are in the 35% tax bracket. What is the net present value of the project? (Please show all work)
Comment: Need years 1-9, then year 10 by itself
List out for both 1-9 and 10:
revenue
expenses
gross profit
deprecation
pre tax earnings
taxes
profit
dep
total cf
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