Before-tax required rate of return

Assignment Help Chemistry
Reference no: EM13921140

Deer Valley Lodge, a ski resort in the Wasatch Mountains of Utah, has plans to eventually add five new chairlifts. Suppose that one lift costs $2 million, and preparing the slope and installing the lift costs another $1.3 million. The lift will allow 300 additional skiers on the slopes, but there are only 40 days a year when the extra capacity will be needed. (Assume that Deer park will sell all 300 lift tickets on those 40 days.) Running the new lift will cost $500 a day for the entire 200 days the lodge is open. Assume that the lift tickets at Deer Valley cost $55 a day. The new lift has an economic life of 20 years.

Assume that the before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer.

Assume that the after-tax required rate of return for Deer Valley is 8%, the income tax rate is 40%, and the MACRS recovery period is 10 years. Compute the after-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer.

What subjective factors would affect the investment decision?

Reference no: EM13921140

Questions Cloud

Debt and assets ratio : Beaverton Corporation has debt/assets ratio of .25, its cost of debt is 7% and that of equity 12%. The tax rate of Beaverton is 30%. The company is not growing and it has a dividend payout ratio of 100%. Its dividend per share is $2.5. Beaverton has ..
How concept of risk premium in incentive compensation relate : How does the concept of a risk premium in incentive compensation relate to the concept of a compensating differential in compensation policy?
Evaluating why the product failed : You are the product manager responsible for a horrible product failure but in your wisdom, you are evaluating why the product failed. What factors would you consider in your evaluation.
Capital half with debt and half with equity at existing rate : Gresham Corporation has 40% debt and 60% equity (market values) in its capital structure. The pretax cost of debt is 8.5%, and that of equity 15.5%. The total value of the company is $320 million and its income tax rate is 40%. The company has decide..
Before-tax required rate of return : Assume that the before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to suppor..
Concepts to current job and career in the future : Reflecting on the past ten (10) weeks, specify what you believe are the two (2) most important concepts you have learned in this course. Predict two (2) ways you will be able to apply these concepts to your current job and career in the future.
Problem regarding the notion of intelligence : Intelligence testing at its inception measured one notion of intelligence. The work of Gardner, Spearman, and others has challenged that notion. In this assignment, write a paper that addresses the idea of what intelligence testing should actually..
Use regression to develop a trend line : Use regression to develop a trend line that could be used?to forecast monthly sales for the next year. Is the slope of?this line consistent with what you observed in question 1? ?If not, discuss a possible explanation.
What general repetition scheme would you suggest : What general repetition scheme would you suggest in a training program for the following trainees: power lifter, soccer player, office worker, carpenter, football player, obese client, runner, swimmer? Why do you feel that these recommendations wo..

Reviews

Write a Review

Chemistry Questions & Answers

  Explain reaction is spontaneous at all temperatures

Consider the combustion of glucose (C6H12O6). This reaction is 1. spontaneous at all temperatures 2. non-spontaneous towards lower temperatures 3. non-spontaneous at all temperatures 4. spontaneous towards higher temperatures

  The decomposition of dinitrogen pentaoxide has and

the decomposition of dinitrogen pentaoxide has and activation energy of 102 kjmol and delta h degree rsn 55 kjmol.

  Checking the accuracy of a volumetric flask marked

You are checking the accuracy of a volumetric flask marked 10.00 mL. You measure the volume of water contained in the flask by measuring the mass of the empty flask

  Explain what is the maximum mass in grams of nh3

What is the maximum mass in grams of NH3 that can be produced by the reaction of 1.0g of N2 with 3.0g of H2

  Define the total ionic equation and net ionic equation

Ca(HCO3)2(s) + HBr(aq) For the equation given above, enter the total ionic equation and net ionic equation

  Explain distinguish a metallic element from a nonmetal

Find the molcular heat capacity in units. Does the law hold up? Can you distinguish a metallic element from a nonmetal this way. Metalloids

  State is the lewis electron dot structure for seo2

State is the Lewis electron dot structure for SeO2 O--Se--O with one of the oxygens double bonded to Se as well as 6 electrons around the single bonded O and 4 electrons around the double bonded O and 2 electrons on Se. what is the right structure..

  Describe a reaction has a rate constant

A reaction has a rate constant of 0.0810 sec-1, how much of the compound (in mol/L) is left after 0.752 min, if there was 0.303 mol/L at the start

  Define calculate the molar mass of the polymer

A 202 mL benzene solution containing 2.27g of an organic polymer has an osmotic pressure of 8.63 mmHg at 21 degrees Celsius. Calculate the molar mass of the polymer

  Draw the reaction of indole and water

Draw the reaction of indole and water. Show the flow of electrons in the reaction. Draw the reaction of indole and hydroxide ion.

  How many grams of no and of h2o form

Question- One of the steps in the commercial process for converting ammonia to nitric acid is the conversion of NH3 to NO, 4NH3(g)+5O2(g)?4NO(g)+6H2O(g) How many grams of NO and of H2O form

  What is the percent by mass of sulfur trioxide

What is the percent by mass of sulfur trioxide (SO3) if oleum is expressed as 3H2SO4 . 5SO3?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd