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i need an explanation and answer to this finance problem. Over the past six months, Six Flags conducted a marketing study on improving their park
i need an explanation and answer to this finance problem.
Over the past six months, Six Flags conducted a marketing study on improving their park experience. The study cost $3.00 million and the results suggested that Six. Flags add a kid's only roller coaster. Supjose that Six Flags decides to build a new roller coaster for the upcoming operating season. The depreciable equipment for the roller coaster wil cost $50.00 million and an additional $5.00 milition to install. The equipment will be depreclated straight-line over 20 years. The marketing team at Sx. Flags expects the coaster to increase attendance at the park by 5%. This translates to 111,365.00 more visitors at an average ticket price of $39.00, Expenses for these visitors are about 11.00% of sales. There is no impact on working capital. The average visitor spends $22,00 on park merchandise and concessions. The after-fax operating margin on these side effocts is 40.00%. The tax rate facing the firm is 37.00%, while the cost of capital is 10.00%. What is the NPV of this coaster project if Sox Flags will evaluate it over a 20-year period? (Six Flags expects the first year project cash flow to grow at 5% per year, going forward) (Express answer in millions) Answer Format: Currency: Round to: 2 decimal places Step by Step Solution
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