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(a) = around $12.34 M
(b) = N/A find it for me
(c) = around $125 M
(d) = 22.6%
A professional sports team has decided to build a new stadium with the following costs.Initial construction cost: $82 million
Annual maintenance cost: $6.5 million per year
Demolition cost: $12 million
The demolition cost is the cost of razing (tearing down) the stadium at the end of its useful life of 40 years. Use this information to answer each of the following questions assuming an interest equal to the team’s minimum attractive rate of return of 15%.
What is the capital recovery cost of the new stadium?
What uniform annual revenue would the stadium need to generate each year in order to break even on the total cost associated with constructing, maintaining, and demolishing the stadium?
What is the capitalized cost of the stadium?
What would be the internal rate of return if the stadium were to generate annual revenues of $25 million?