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i need an explanation and answer to this finance problem. Over the past six months, Sox Flaps conducted a marketing study on improving their park
i need an explanation and answer to this finance problem.
Over the past six months, Sox Flaps conducted a marketing study on improving their park experience. The study cost $3.00 million and the results suggested that Sox. Flags add a kid's only roller coaster. Suppose that Six Flags decides to build a new roller coaster for the upcoming operating season. The depreciable equipment for the roller coaster will cost $50.00 millon and an additional $5.00 milion to install. The equipment will be deprecioted straight-line over 20 years. The marketing team at Six Flags expects the coaster to increase attendance at the park by 5%. This translates to 124,816.00 more visitors at an average ticket price of S40.00. Expenses for these visitors are about 16.00% of sales. There is no impact on working capital. The average visitor spends $24.00 on park merchandise and concessions. The after-tax operating margin on these side ettects is 25.00%. The tax rate facing the firm is 39.00%, while the cost of capital is 10.00% Step by Step Solution
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