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https://www.studypool.com/discuss/363558/serious-tutors-only-absolutely-no-plagiarism-11 Answer 1. The tax before Computation of NVP related to new lift as well as managers’ advice: Total Investment Total Investment =1 lift cost + (installation cost & slope preparation) =$2,000,000 + $1,300,000 = $3, 3000, 000 Annual Cash Flow Days worked = 40 Per day worked = $55 Skiers = 300 Total Cash flows = 40*55*300 = $660,000 Incremental Cost Day = $200 Per day Rate= $500 Total Incremental Cost = 200 *$500 = $100,000 Computation of Net cash Flow: Cash inflow = $660,000 Less: Cost = $100,000 Net cash Flow = $560,000 Computation of Before Tax NPV Total Present Value of cash flow @14 % = net cash flows * Present value @14% = $560,000* 6.623 = 3,708,936 Total NPV Total NPV = Net cash flow - cash outflows = $3,708,936.00 - $3,300,000.00 = $408,936.00 The above computed profit of 408,936 shows that it is profitable for the managers of Deer Valley to make investment in new lift. Answer.2 After tax cash flow After tax cash flow = Total Cash flow – 40% tax = $560,000- 224,000 = 336,000 Net Present value of after tax cash flow = Net Cash Flows after Tax* P ...
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