The CLP water park is considering the purchase of a new water slide. The cost to purchase the equipment is $3,500,000 with an additional $250,000 for installation. The equipment has an expected life of 6 years and will be depreciated using a MACRs 7-year class, (Given)

Estimations are the ride will run 150 times per day and carry an average of 25 riders per run. Also, the operating season is 120 days

The first year the ticket price will be $4.25 and is predicted to increase every year by 4%. Variable cost per rider has been estimated at $1.50. The total fixed costs of the project are $320,000/year.

After 6 years the ride will be dismantled at a cost of $115,000 and sold for $450,000.

The cost of capital is 12% and the marginal tax rate is 35%

a. Calculate the initial outlay, the annual after-tax cash flows, and the terminal value

b. Calculate NPV, IRR, and MIRR