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.<\/p>
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 million and an additional $5.00 million to install. The equipment will be depreciated straight-line over 20 years.<\/p>
The marketing team at Six Flags expects the coaster to increase attendance at the park by 5%. This translates to 121,711.00 more visitors at an average ticket price of $39.00. Expenses for these visitors are about 11.00% of sales.<\/p>
There is no impact on working capital. The average visitor spends $23.00 on park merchandise and concessions. The after-tax operating margin on these side effects is 33.00%. The tax rate facing the firm is 39.00%, while the cost of capital is 10.00%.<\/p>
<\/p>
What is the NPV of this coaster project if Six 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)<\/p>
(Express answer in millions)<\/p>", "transcribed_text": "", "related_book": { "title": "Contemporary Auditing", "isbn": "357515404, 978-0357515402", "edition": "12th Edition", "authors": "Michael C Knapp", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2021\/11\/6180c95dca776_1096180c95d46c39.jpg", "uri": "\/textbooks\/contemporary-auditing-12th-edition-9-78e-12", "see_more_uri": "\/textbooks\/business-accounting-9" }, "free_related_book": { "isbn": "1786469847", "uri": "\/textbooks\/qlikview-for-developers-design-and-build-scalable-and-maintainable-bi-solutions-1st-edition-978-1786469847-370267", "name": "Qlikview For Developers Design And Build Scalable And Maintainable Bi Solutions", "edition": "1st Edition" }, "question_posted": "2024-06-06 20:20:03", "see_more_questions_link": "\/study-help\/questions\/business-accounting-2024-September-22", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/mary-rel-was-hired-as-the-new-store-manager-for", "description": "Mary Rel was hired as the new store manager for the Bargain Bin. 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