Number of days of the winter season

Assignment Help Taxation
Reference no: EM13939827

A snow resort group is considering investing in a ski resort at the Pocono's Mountains. The initial investment required is $3 millions but the revenues and operating costs depends on the number of days of the winter season. The number of days of the winter season depends on the weather and consequently is subject to uncertainty, which is estimated to be normally distributed with a mean of 210 days and a standard deviation of 15 days. Each day that the resort operates generates revenues of $6000. The operating and maintenance costs of the first year are estimated to be $500,000 but they increase each year based on usage of the facility, which is a random variable. The salvage value also depends on the usage of the facility and is uncertain. The probability distributions of the incremental cost per year in the O&M costs and the salvage values are as follows:

The group uses a MARR of 12% and plans to operate the facility for 5 years, at which time will be sold at the salvage value. Perform a Monte Carlo simulation with 1000 replications to determine
a)The expected value of the present worth
b)The standard deviation of the PW
c)Using the Central Limit theorem, calculate the probability the investment be profitable.

Reference no: EM13939827

Questions Cloud

When should an attribute of a class be static : Is there ever a reason to have a public attribute in a class?
Ancestral home in development of modern astronomy : • Write an essay no longer than two pages, not more than 1000 words (6000 characters) Subject 1: Women in Astronomy • The ups and downs of women in astronomy
Alcohol and drug abuse records : Some alcohol and drug abuse records were inadvertently left accessible via internet. Fifty patients were affected.
Do you accept or reject or accept hypothesis : Describe your observation. Include any background information you may have found. Write a statement that describes your explanation for the observation.
Number of days of the winter season : A snow resort group is considering investing in a ski resort at the Pocono's Mountains. The initial investment required is $3 millions but the revenues and operating costs depends on the number of days of the winter season.
What is the companys cost of equity : The Muse Co. just issued a dividend of $3.45 per share on its common stock. The company is expected to maintain a constant 7.10 percent growth rate in its dividends indefinitely. If the stock sells for $69 a share, what is the company’s cost of equit..
Using the following incomplete accounts : A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.
Bullish on particular security : You are bullish on a particular security and have $500 to invest. The stock is trading for $100. Call options with a strike price of $100 are trading for $1.00. You decide to invest your entire $500 by purchasing call options. After 1 month the stock..
Extract individual digits or sequences of digits from it. : Given a large number we sometimes need to extract individual digits or sequences of digits from it. For example, given a four-digit year (2010) we may need to extract just the two-digit year or the century.

Reviews

Write a Review

Taxation Questions & Answers

  Corporate tax return problem

Cara Siler, Janna Funk, and Valerie Cloward each own one-third of the common stock of Blue Catering Services Inc. (BCS). BCS was incorporated on February 4, 2008.

  Advise graham of assessability-deductibility of his wagering

The following financial information relates to a suburban retail business, Serendipity Pty Ltd that owns and operates a retail giftware business in High Street Uptown.

  How much total combined income tax

George Judson is the sole shareholder and employee of Black Corporation, a C corporation that is engaged exclusively in engineering services. During the year.

  Compute the total tax cost in 2004

Compute the total tax cost in 2004 for each alternative if Evan is single and this is his only source of income which alternative business form do you recommend based solely on the first year tax costs?

  Under a divorce agreement executed this year

1) Under a divorce agreement executed this year, an ex-wife receives from her ex-husband cash of $25,000 annually for ten years. The agreement does not say that the payments are excludible from gross income. Does the ex-wife have gross income and, if..

  A marc is the son-in-law of bernard bernard owns all the

a. marc is the son-in-law of bernard. bernard owns all the issued shares of mammoth inc. an import company whose

  Journal entry of the baxter company

Baxter Company began operations in 2006 and was profitable through 2009, during which time the tax rate was 30%. At the end of 2010, the company reported a pretax operating loss of $135,000 for both financial reporting and income taxes.

  What was the amount of cash payments for income tax

Determine the If sales for the current year were $450,000 and accounts receivable decreased by $21,000 during the year,

  Problem 1additional factsthe taxpayer exchanges property in

problem 1additional factsthe taxpayer exchanges property in 2010 with a fair market value of 5500000 that has a basis

  Discuss whether abc co is a resident of australia

Discuss whether ABC Co is a resident of Australia and the income tax consequences of the above for the year ended 30 June 2015. Support your answer with reference to case law and legislation. Ignore CGT and FBT implications.

  Gregory and lulu clifden tax problem

Gregory and lulu clifden tax problem - Gregory R. and Lulu B. Clifden live with their family at the Rock Glen House Bed & Breakfast, which Gregory operates.

  Determine sam taxable income

Determine Sam taxable income

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