Business
Business, 12.08.2020 08:01, lovelysoul4698

Consider how Clare Valley, a popular ski resort, could use capital budgeting to decide whether the $8 million Stream Park Lodge expansion would be a good investment. Assume that Clare Valley uses the straight-line depreciation method and expects the lodge expansion to have a residual value of $700,000 at the end of its ten-year life. Requirement:
1. Compute the average annual net cash inflow from the expansion.
2. Compute the average annual operating income from the expansion.
3. Compute the payback period.
4. Compute the ARR.
Assume that Clare Valley's managers developed the following estimates concerning a planned expansion to its Blizzard Park Lodge (all numbers assumed):
Number of additional skiers per day $117
Average number of days per year that weather
conditions allow skiing at Clare Valley $164
Useful life of expansion (in years) 9
Average cash spent by each skier per day 243
Average variable cost of serving each skier per day $134
Cost of expansion $8,500,000
Discount rate 12%

answer
Answers: 2

Other questions on the subject: Business

image
Business, 22.06.2019 10:30, drejones338p04p2p
How are interest rates calculated by financial institutions? financial institutions generally calculate interest as (1) interest or (.
Answers: 1
image
Business, 22.06.2019 12:20, lamwil9432
Selected transactions of the carolina company are listed below. classify each transaction as either an operating activity, an investing activity, a financing activity, or a noncash activity. 1. common stock is sold for cash above par value. 2. bonds payable are issued for cash at a discount
Answers: 2
image
Business, 22.06.2019 13:20, ooEVAoo
Suppose farmer lane grows and sells cotton in a perfectly competitive industry. the market price of cotton is $1.64 per kilogram, and his marginal cost of production is $1.44 per kilogram, which increases with output. assume farmer lane is currently earning a profit. can farmer lane do anything to increase his profit in the short run? farmer lane: a. cannot do anything to increase his profit. b. may or may not be able to increase his profit. c. can increase his profit by raising his price. d. can increase his profit by producing more output. e. can increase his profit by shutting down.
Answers: 1
image
Business, 22.06.2019 15:00, menendezliliana5
(a) what do you think will happen if the price of non-gm crops continues to rise? why? (b) what will happen if the price of non-gm food drops? why?
Answers: 2
Do you know the correct answer?
Consider how Clare Valley, a popular ski resort, could use capital budgeting to decide whether the $...

Questions in other subjects: