Question
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
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.
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.
The marketing team at Six Flags expects the coaster to increase attendance at the park by 5%. This translates to 122,077.00 more visitors at an average ticket price of $40.00. Expenses for these visitors are about 13.00% of sales.
There is no impact on working capital. The average visitor spends $20.00 on park merchandise and concessions. The after-tax operating margin on these side effects is 31.00%. The tax rate facing the firm is 37.00%, while the cost of capital is 9.00%.
What is the project cash flow for year 1? (express answer in millions)
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Answer format: Currency: Round to: 4 decimal places.
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