1. Assume that the before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer.
Investment by Deer valley Ski Lodge = Cost of one lift plus slope preparation and installation cost of new lift.
Investment = $2,000,000 + $1,300,000 = $3,