Snowbowl Resort wants to create more snowmaking capacity on their ski mountain. This increase in...
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Accounting
Snowbowl Resort wants to create more snowmaking capacity on their ski mountain. This increase in capacity requires the purchase of additional snow-making equipment that will cost $689,000. Based on input from the Accounting Department, this would be depreciated on a straight-line basis to zero over the 6-year life of this new snowmaking project. When the project is over, the equipment can be sold 5188,000. There is a need for additional networking capital at the beginning of the project in the amount of $58,000. This will be recovered at the end of the project. The operating cash flow will be $154,200 a year. Assume the appropriate discount rate is 12 percent and that the appropriate tax rate is 40 percent. What is the net present value of this snowmaking project? Multiple Choice 0 -$31,394 0 0 -$23,840 -$33,809 0 -$26.488 m #2 - Due 4/24 by 12 noon Saved Help Save -$31,394 -$23,840 o o o o of -$33,809 $26,488 -$28,254
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