If a chair lift cost $2 million and installation costs $1.3 million , keep in mind that this lift will allow 300 skiers but for only 40 days out of a year,only when extra capacity is needed.Running cost for the lift is $500 a day for 200 days that the lodge is open, Now assume that the lift tickets cost $55 a day and the added cash expenses for each skier-day are $5 . The new lift has an economic life of 20 years.

Assume the before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and tell manager to add the lift or reject it.

The after-tax required rate of return for Deer Valley is 8%, the income tsks rate is 40% and MACRS recovery period is 10 years, what are the after-tax NPV of the new lift and tell manager whether to accept the offer or reject it.

What subjective factors would affect the investment decision?:confused:

Well it really depends on what you are looking for if you think you can make more then $200 a day then go for it because you will be making your money back and have a great profit but if you don't then I wouldn't buy it

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