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Blue Sky Ski Resort plans to install a new chair lift. Construction is estimated to require an immediate outlay of $220 000. The life is estimated to be 15 years, with a salvage value of $80 000. Cost of clearing and grooming the new area is expected to be $30 000 for each of the first three years of operation. Net cash inflows from the lift are expected to be $40 000 for each of the first 5 years and $70 000 for each of the following 10 years. Calculate the rate of return for their investment

Blue Sky Ski Resort plans to install a new chair lift. Construction is estimated to require an immediate outlay of $220 000. The life is estimated to be 15 years, with a salvage value of $80 000. Cost of clearing and grooming the new area is expected to be $30 000 for each of the first three years of operation. Net cash inflows from the lift are expected to be $40 000 for each of the first 5 years and $70 000 for each of the following 10 years. Calculate the rate of return for their investment

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A 3. The Blue Sky Ski Resort plans to install a new chair lift. Construction is estimated to require an immediate outlay of $220 000. The life is estimated to be 15 years, with a salvage value of $80 000. Cost of clearing and grooming the new area is expected to be $30 000 for each of the first three years of operation. Net cash inflows from the lift are expected to be $40 000 for each of the first 5 years and $70 000 for each of the following 10 years. Calculate the rate of return for their investment (Please solve without excel using trial and error method)
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