Deer Valley Lodge a ski resort in the Wasatch Mountains ofUtah has plans to even

Deer Valley Lodge a ski resort in the Wasatch Mountains ofUtah has plans to eventually add five new chairlifts. Suppose thatone lift costs $2 million and preparing the slope and installingthe lift costs another $1.3 million. The lift will allow 300additional skiers on the slopes but there are only 40 days a yearwhen the extra capacity will be needed. (Assume that Deer park willsell all 300 lift tickets on those 40 days.) Running the new liftwill cost $500 a day for the entire 200 days the lodge is open.Assume that the lift tickets at Deer Valley cost $55 a day and theadded cash expenses for each skier-day are $5. The new lift has aneconomic life of 20 years.