... investment. Show calculations to support your answer. Part 1: 1. What is the initial investment? = $3,300,000 ($2,000,000 one chairlift cost + 1,300,000 installing of lift and slope preparation) 2. What are the expected cash inflows? = $660,000 (300 lift tickets x $55 cost of each lift ticket x 40 extra days) 3. What are the expected cash outflows? = $160,000 $60,000 (300 lift tickets x $5 extra cost x 40 extra days) $100,000 ($500 cost x 200 days of entire operation) 4. What are the net cash flows (inflows - outflows)? = $500,000 $660,000 (inflows) - $160,000 (outflows) 5. Present value of net cash flows: = $3,311,550 $500,000 (net cash flow) * 6.6231 (PV of ordinary annuity) (Horngren, Sundem & Stratton, 2005, p. 674, table 2) 6. Compare to the initial investments and make the determination of will this be a profitable investment? = $11,550 (Initial investments) vs. (PV of net cash flows) $3,311,550 - $3,300,000 My recommendation to the managers of Deer Valley is to add the ...

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