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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 122,996.00 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 $23.00 on park merchandise and concessions. The after-tax operating margin on these side effects is 32.00%. The tax rate facing the firm is 40.00%, while the cost of capital is 9.00%. 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) (Express answer in millions) Answer format: Currency: Round to: 2 decimal places. Over the past six months, Six Flags conducted a marketing study on improving their park experience. The study cost $3 million and the results suggested that Six Flags add a kids 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 million and an additional $5 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 100,000 more visitors at an average ticket price of $38.00. Expenses for these visitors is about 10% of sales. There is no impact on working capital. The average visitor spends $20 on park merchandise and concessions. The after-tax operating margin on these side effects are 20%. The tax rate facing the firm is 36%, while the cost of capital is 10%. What is the NPV of this coaster project if Six Flags will evaluate over a 20 year period? (Six Flags expects cash flows to grow at 5% per year over the 20 year project) SOLUTION: This is a growing annuity, so we have the following for NPV: NPV=rgFCF1x(1(1+r1+g)N)+FCF0NPV=0.100.05$3,578,000x(1(1.101.05)20)$55,000,000=$11,653,273.57