The Ocean City Water Park is considering the purchase of a new log flume

ride. The cost to purchase the equipment is $$1,800,000$ and it will cost

an additional $$180,000$ to have it installed. The equipment has an

expected life of $6$ years, and it will be depreciated using a MACRS $5-$year

class life. Management expects to run about $350$ rides per day, with each

ride averaging $8$ riders. The season will last for $120$ days per year. In the

first year, the ticket price per rider is expected to be $$5\mathrm{.}00$ and it will be

increased by $5\%$ per year. The variable cost per rider will be $$1\mathrm{.}75$ and

inflation is expected to be $3\%$ per year, and total fixed costs will be

$$275,000$ per year. After six years, the ride will be dismantled at a cost

of $$95,000$ and the parts will be sold for $$725,000.$ The cost of capital is

$12\%,$ the re$-$investment rate is $10\%$ and its marginal tax rate is $35\%.$

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

terminal cash flow.

b$.$ Calculate the NPV$,$ IRR and MIRR

c$.$ Should the Ocean City Water Park proceed with this project? Why

or Why not?