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26 September 2009 @ 11:34 am
Can anyone help with this?  
 I need some serious help.  I have tried this problem and each time I try it, I run it by my teacher and the calculations are wrong.  My passing this problem with a high mark determines whether I pass this class now because it is literally making me nuts.  This is the toughest class I have taken in the last 10 months of school.  So if ANYONE can help, I know some people are good at this stuff and see the calculations right away.  It's not meant to take a ton of paperwork.

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.

  1. 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.
  2. 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.
  3. What subjective factors would affect the investment decision?

EDIT: FOUND SOME PEOPLE FROM SCHOOL - WE ARE WORKING ON IT TOGETHER CUZ WE FEEL ONE ANOTHER'S PAIN...

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I feel: crazycrazy
I'm listening to: High Hopes by Pink Floyd