A 3-year project from Wonderland has the information below: CAPEX for project is $15,000,000 (initial capital) and being depreciated over asset life of three years. Depreciation expense every year = $3,000,000. The liquidation value at the end of the project life is $1,500,000 (before tax) Forecasts of Wonderland Tour sales: o 310,000 tickets during Year 1 o 420,000 tickets during Year 2 o 430,000 tickets during Year 3 o 450,000 tickets during Year 4 o 460,000 tickets during Year 5

The expected sale price for whole day ride is $70.00 in first 4 years and increase 10% at Year 5. Variable costs for whole day ride are 30% per ticket sale. Annual fixed costs are expected to be $750,000. Disneys corporate tax rate is 34%. a) Calculating operating cash flows in 5 years. (20 marks) b) Calculating NPV (If WACC of project is 12%), and payback period. (20 marks)

Please explain me the "Depreciation" and "After tax salvage value" in this exercise