Estimate Revenues and Costs for New Amusement Park Launch

Q: Estimate Revenues and Costs for New Amusement Park Launch

This question evaluates financial modeling, back-of-the-envelope estimation, unit-economics assessment, and sensitivity analysis skills applied to estimating revenues, costs and profitability for a capital investment.

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Question

Amusement Park Case: Revenue, Costs, Profit, and Go/No-Go

Context

You are advising an amusement-park operator evaluating whether to build and launch a new regional park. Provide a structured, back-of-the-envelope financial model using clearly stated assumptions. Your goal is to estimate annual revenues, costs, and profit, and to make a recommendation on whether to proceed.

Task

State all assumptions (market size/attendance, prices, per-capita spend, operating days, etc.).
Estimate annual revenues from:
- Ticket sales
- Food & beverage (F&B)
- Merchandise
- Parking
Estimate annual costs, split into fixed vs. variable:
- Fixed: build/capex treatment (e.g., depreciation or capital charge), baseline operations, maintenance, salaried staffing, insurance/taxes, marketing
- Variable: hourly staffing, F&B and merchandise COGS, utilities/consumables, payment processing, parking ops
Calculate expected annual profit under a base case.
Perform a simple sensitivity/break-even analysis (e.g., required attendance to break even; impact of ticket price changes).
Recommend proceed vs. do-not-proceed and note key risks or levers that could change the decision.

Assume reasonable, clearly justified numbers if not provided.

Estimate Revenues and Costs for New Amusement Park Launch

Amusement Park Case: Revenue, Costs, Profit, and Go/No-Go

Context

Task

Solution

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