Considering demolishing old roller coaster

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Reference no: EM133980866

Question

An amusement park is considering demolishing an old roller coaster and building a brand new one in its place. Construction is estimated to require $1.5 million. The amusement park is planning to charge an entry fee for each rider. Estimated annual expenses are as follows (assume they remain constant): labor $85,000, maintenance $55,000.

What annual revenue from entry fees would be required in order to make the project feasible? Assume a discount rate of 5% and an analysis period of 50 years. Draw a cash flow diagram.

Reference no: EM133980866

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