Welcome to Westonci.ca, where you can find answers to all your questions from a community of experienced professionals. Discover detailed solutions to your questions from a wide network of experts on our comprehensive Q&A platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

The Astro World amusement park has the opportunity to expand its size nowâ (the end of yearâ 0) by purchasing adjacent property for â$ and adding attractions at a cost of â$. This expansion is expected to increase attendance by percent over projected attendance without expansion. The price of admission is â$â, with aâ $5 increase planned for the beginning of year 3. Additional operating costs are expected to beâ $100,000 per year. Estimated attendance for the next fiveâ years, without expansionâ, is asâ follows:

Year 1 2 3 4 5
Attendance 31,000 35,000 36,750 38,500 42,000

a. The cash flows attributable to theâ park's expansion in year 1 are:_______
b. The cash flows attributable to theâ park's expansion in year 2 are:_______
c. The cash flows attributable to theâ park's expansion in year 3 are:_______
d. The cash flows attributable to theâ park's expansion in year 4 are:_______
e. The cash flows attributable to theâ park's expansion in year 5 are:_______


Sagot :

Answer:

Percent increase as a result of expansion = 30%

Price of admission = $35

Cashflow attributable to the park's expansion = Estimated attendance without expansion * percent increase as a result of expansion * admission fee - additional operating costs per year.

Year 1

= 31,000 * 30% * 35 - 100,000

= $225,500

Year 2

= 35,000 * 30% * 35 - 100,000

= $267,500

Year 3

= 36,750 * 30% * 40 - 100,000

= $341,000

Year 4

= 38,500 * 30% * 40 - 100,000

= $362,000

Year 5

= 42,000 * 30% * 40 - 100,000

= $404,000