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Consider how Hunter Volley Snow Park Lodge could use capital budgeting to decide whether the $11.000.000 Snow Park Lodge expansion would be a good investment.
Consider how Hunter Volley Snow Park Lodge could use capital budgeting to decide whether the $11.000.000 Snow Park Lodge expansion would be a good investment. Asume Hunter Valley's managers developed the following estimates concerning the expansion (Click the icon to view the estimates) Assume that Hunter Villey uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $600,000 at the and of its seven your life. The average annual no cash inflow from the expansion is expected to be $2.714,756 Payback years 121 skiers Number of additional skiers per day Average number of days per year that weather conditions allow skiing at Hunter Valley Useful life of expansion (in years) Average cash spent by each skier per day Average variable cost of serving each skier per day Cost of expansion Discount rate 142 days 7 years 241 83 11,000,000 10%
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