Mirage Resorts, Inc., recently completed construction of Bellagio Hotel and Casino in Las Vegas.
Total cost of this project was approximately $ billion. The strategy of the investors is to build a gambling civic orne or he ollip and area hey inpire ey the for apery inte
of fine art. The investors are confident that if the facility attracts highvolume and highstakes gaming, the net revenues will justify the $ billion investment several times over. If the facility fails to attract high rollers, this investment will be a financial catastrophe. Mirage Resorts depreciates its fixed assets using the straightline method over the estimated useful lives of the assets.
Assume construction of Bellagio is completed and the facility is opened for business on January Year Also assume annual net income before depreciation and taxes from Bellagio is $ million, $ million, and $ million for Year Year and Year and that the tax rate is
Required:
Compute the return on assets for the Bellagio segment for Year Year and Year assuming management estimates the useful life of Bellagio to be:
a years.
b years.
c years.
d year.
