1) Mount Hood Ski Resort is looking to enlarge its facilities by adding the new ski lift. Initial investment would cost= $2,500,000 and would rise annual expenses by= $75,000. New lift would have useful life of 10 years and salvage value of= $25,000. Increase in skiing capacity would increase revenues by adding=5,000 skiers per year, paying average of= $100 for lift ticket. Mt. Hood Ski Resort’s cost of capital is= 6% and is in 35% tax bracket. Determine the net present value of project?
2) Create the executive summary explaining your suggestions for each project and overall cost, net cash flows, and expected returns of operating configuration which you recommend. Make sure to give explanation for your suggestions in terms of investment criteria. Make sure to report full cost of facility as it is configured per your recommendations. Provide and give explanation for your operating strategy performance metrics.