04 May CALCULATE BASE CASH CASH FLOWS RESULTING FROM THE PROJECT FOR EACH OF THE NEXT 13 YEARS.
What are the risks to J.R. Murray and Snowbowl if they decide to move forward with the Environmental Impact Statement (EIS)? What are the risks of not moving forward?
(5 points)Do the partners of Arizona Snowbowl Resort Limited Partnership have a moral/ethical responsibility to abandon the project and possibly lose their invested capital in light of the cultural concerns of a segment of the population (the Native American community) or are the partners justified allowing the decision to be made by the USFS and the judicial system?
(5 points)What type of analyses would be useful in helping make the decision whether or not to proceed with EIS?What other information would you find useful to aid in the decision making process?
(5 points)(a) Use the information provided in the case and calculate the weighted average cost of capital (WACC) for Arizona Snowbowl.
(5 points)(b) Do you believe the WACC you calculated in part (a) accurately reflects Snowbowls WACC? If so, why? If not, explain why not and give your estimate of Snowbowls accurate WACC. Justify your answer.
(5 points)Generate depreciation schedules for the EIS and for the remaining investment required for the project.
(15 points)Calculate base cash cash flows resulting from the project for each of the next 13 years. Use the following assumptions: The anticipated increase in skier days occurs immediately upon completion of the project, beginning in 2006. The projected growth rate in cash flows beyond the 10 year planning period is 5%.
(5 points)Calculate the net present value of the project based on the base cash cash flows from question 7 and your estimate of the WACC from question 5 part (b).
(15 points)(a) Do a sensitivity analysis of the project by allowing the following inputs to vary +/- 10 percent and calculating the resulting effect on NPV (Change one variable at a time resulting in 6 different NPV estimates):
WACC
The increase in the number of skier/snowtuber visits
Growth rate beyond year 10
(5 points)As pointed out in the case, there is a significant possibility that, even if the Snowbowl prepares the EIS and applies for regulatory approval, it will be denied by the USFS, or by the courts in which case the Snowbowl would spend $750,000 for the EIS and get no return (10% probability). Calculate the expected NPV of the project if the probability that the project will be approved is 90%. For this calculation, use the base cash cash flows developed in response to question 7, and your estimate of the cost of capital from question 5 (b).
Note: Calculate NPV of EIS alone – spend $750,000 and get depreciation tax shields only.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.