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The Ocean City Water Park is considering the purchase of a new log flume ride. The cost to purchase the equipment is $ 1 ,
The Ocean City Water Park is considering the purchase of a new log flume ride. The cost to purchase the equipment is $ and it will cost an additional $ to have it installed. The equipment has an expected life of years, and it will be depreciated using a MACRS year class life. Management expects to run about rides per day, with each ride averaging riders. The season will last for days per year. In the first year, the ticket price per rider is expected to be $ and it will be increased by per year. The variable cost per rider will be $ and inflation is expected to be per year, and total fixed costs will be $ per year. After six years, the ride will be dismantled at a cost of $ and the parts will be sold for $ The cost of capital is the reinvestment rate is and its marginal tax rate is
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