Ocean City Water Park - New log flume ride analysis

a. Calculate the initial outlay, annual after-tax cash flow for each year, and the terminal cash flow.

b. Calculate the NPV, IRR, and MIRR of the new equipment. Is the project acceptable?

c. Create a data table that shows the NPV, IRR, and MIRR for MACRS classes of 3, 5, 7, 10, 15, and 20 years. What do yo conclude about the spead of depreciation and the profitabiltity of an investment?

d. Using the Goal Seek tool, calculate the minimum ticket price that must be charged in the first year in order to make the project acceptable.

Cost of Equipment	$3,500,000
Installation	$250,000
Life (Years)	6
MACRS Class	7
Rides per day	150
Riders per ride	25
Days per season	120
Year 1 ticket price	4.00
Ticket price increase	4%
Variable cost per rider	1.40
Annual fixed costs	$320,000
Salvage value	$450,000
Removal cost	$115,000
WACC	12%
Tax Rate	35%