Cost of borrowing on this investment

Assignment Help Financial Management

Reference no: EM131868197

PSU has decided to renovate the football stadium and is trying to determine how much it should charge for tickets to help offset the expenses. The renovations costs, including labor and materials, is estimated to be $275,000,000 (275 Million Dollars). Each year the maintenance cost is expected to increase by 5%. The operations and maintenance costs are expected to be $1 million per year, the utilities about $200,000 per year. The average attendance for each year is 50,000 as measured by the number of tickets sold. Assuming no other source of income besides regular ticket sales (excludes student tickets), what should the University charge per ticket to recover at least 6% cost of borrowing on this investment? The stadium is expected to utilized for 40 years and then be renovated or replaced (i.e. NO SALVAGE VALUE).

Reference no: EM131868197

Questions Cloud

What is yearly interest rate being offered by the dealer : What is the yearly interest rate being offered by the dealer? (to the? customer)?

Hedging instrument that the investor has to sell : What is the quantity f of the hedging instrument that the investor has to sell? We suppose that the YTM curve increases instantaneously by 0.1%.

Behind saving at the beginning of the current month : How will his results change is he behind saving at the beginning of the current month?

Short sell the stocks in the market index : Assuming you short sell the stocks in the market index, how high and low can the futures price be without giving rise to arbitrage opportunities?

Cost of borrowing on this investment : what should the University charge per ticket to recover at least 6% cost of borrowing on this investment?

Calculate the price of bonds at each of years to maturity : Assuming that the yield to maturity of each bond remains at 9.6% over the next 4 years, calculate the price of bonds at each of the following years to maturity.

The year to maturity on the saleemi bonds : The Saleemi corporation's $1000 bonds pay 9% interest annually and have 13 years until maturity. The year to maturity on the Saleemi bonds is_

What stock price will you get margin call : You post the 50% margin required on the short sale. If your broker requires a 30% maintenance margin, at what stock price will you get a margin call?

Social media posting on political activity : This could mean that no social media posting on political activity is allowed and it could mean that no political activity is allowed at all.

User Account

All Pages