Vail Resorts, Inc. (MTN), announced a $415 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $99 million in equal annual cash flows for each of the first 10 years of the project life. Internal Rate of Return Method for a Service CompanyVail Resorts, Inc. (MTN), announced a $415 million expansion of lodging properties, ski lifts, and terrain in Park City,Utah. Assume that this investment is estimated to produce $99 million in equal annual cash flows for each of the first10 years of the project life.Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%0.9430.9090.8930.8700.8331.8331.7361.6901.6261.5282.6732.4872.4022.2832.10643.4653.1703.0372.8552.5894.2123.7913.6053.3532.9916.4.9174.3554.1113.7853.3265.5824.8684.5644.1603.60586.2105.3354.9684.4873.8376.8025.7595.3284.7724.031107.3606.1455.6505.0194.192a. Determine the expected internal rate of return of this project for 10 years, using the present value of an annuity of$1 table above.b. Identify the uncertainties that could reduce the internal rate of return of this project?

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Vail Resorts, Inc. (MTN), announced a $415 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $99 million in equal annual cash flows for each of the first 10 years of the project life.

Internal Rate of Return Method for a Service Company
Vail Resorts, Inc. (MTN), announced a $415 million expansion of lodging properties, ski lifts, and terrain in Park City,
Utah. Assume that this investment is estimated to produce $99 million in equal annual cash flows for each of the first
10 years of the project life.
Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
0.943
0.909
0.893
0.870
0.833
1.833
1.736
1.690
1.626
1.528
2.673
2.487
2.402
2.283
2.106
4
3.465
3.170
3.037
2.855
2.589
4.212
3.791
3.605
3.353
2.991
6.
4.917
4.355
4.111
3.785
3.326
5.582
4.868
4.564
4.160
3.605
8
6.210
5.335
4.968
4.487
3.837
6.802
5.759
5.328
4.772
4.031
10
7.360
6.145
5.650
5.019
4.192
a. Determine the expected internal rate of return of this project for 10 years, using the present value of an annuity of
$1 table above.
b. Identify the uncertainties that could reduce the internal rate of return of this project?

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