Question

In: Finance

Over the past six months, Six Flags conducted a marketing study on improving their park experience....

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 110,714.00 more visitors at an average ticket price of $39.00. Expenses for these visitors are about 12.00% 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 31.00%. The tax rate facing the firm is 36.00%, while the cost of capital is 8.00%.

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)

Solutions

Expert Solution


Related Solutions

Over the past six months, Six Flags conducted a marketing study on improving their park experience....
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...
Over the past six months, Six Flags conducted a marketing study on improving their park experience....
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...
: A sample of 9 days over the past six months showed that a dentist treated...
: A sample of 9 days over the past six months showed that a dentist treated the following numbers of patients: 22, 25, 20, 18, 15, 22, 24, 19, and 26. If the number of patients seen per day is normally distributed, would an analysis of these sample data reject the hypothesis that the variance in the number of patients seen per day is equal to 10? Use α .10 level of significance. What is your conclusion?
As a salesperson with only six months’ experience, you are somewhat nervous about calling on an...
As a salesperson with only six months’ experience, you are somewhat nervous about calling on an important buyer who has been a purchasing agent for almost 20 years. Three minutes after you have begun your presentation, he rapidly raises his arms straight up into the air and slowly clasps his hands behind his head. He leans so far back in his chair that you think he is going to fall backward on the floor. At the same time, he crosses...
The following data are taken from a study conducted by the National Park System, of which...
The following data are taken from a study conducted by the National Park System, of which Death Valley is a unit. The ground temperatures (°F) were taken from May to November in the vicinity of Furnace Creek. Compute the mean, median, mode,midrange,range, sample standard deviation and variance. 146 180 152 178 168 178 174 168 180 165 178 152 179 144
Sixty percent of adults have looked at their credit score in the past six months. If...
Sixty percent of adults have looked at their credit score in the past six months. If you select 31 customers, what is the probability that at least 20 of them have looked at their score in the past six months? In the morning, about 28% of adults know what they will have for dinner. If one morning, you ask 22 adults if they know what they will have for dinner, what is the probability that more than 6 will say...
For the past six months, you’ve been heading a hiring committee in charge of hiring a...
For the past six months, you’ve been heading a hiring committee in charge of hiring a new division manager. It’s been a grueling process—filtering through thousands of applications, seemingly endless meetings and discussions debating people’s qualifications, so many interviews in different cities that it’s hard to remember whom you met and where, and even more debates about who should be flown to your headquarters for a day of final interviews. But it’s almost over now. After so many interviews, meetings,...
For the past six months, you’ve been heading a hiring committee in charge of hiring a...
For the past six months, you’ve been heading a hiring committee in charge of hiring a new division manager. It’s been a grueling process—filtering through thousands of applications, seemingly endless meetings and discussions debating people’s qualifications, so many interviews in different cities that it’s hard to remember whom you met and where, and even more debates about who should be flown to your headquarters for a day of final interviews. But it’s almost over now. After so many interviews, meetings,...
Student enrollment at a university over the past six years is given below.
  Student enrollment at a university over the past six years is given below. Year(t) Enrollment(In 1,000s) 1 6.30 2 7.70 3 8.00 4 8.20 5 8.80 6 8.00 What is the linear trend expression for the above time series? Select one: a. Tt = 6.63 – 0.34t b. Tt = 6.63t + 0.34 c. Tt = 6.63 + 0.34t d. Tt = 0.77 + 0.59t e. Tt = 2.06 + 1.44t Based on the model you determined in the...
The time series showing the sales of a particular product over the past 12 months is...
The time series showing the sales of a particular product over the past 12 months is contained in the Excel Online file below. Construct a spreadsheet to answer the following questions. Use a=0.2 to compute the exponential smoothing forecasts for the time series (to 2 decimals). Month Time-Series Value Forecast 1 105 2 130 3 125 4 100 5 90 6 120 7 150 8 135 9 95 10 75 11 100 12 105 13 Use a smoothing constant of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT