Decided to renovate the football stadium

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Reference no: EM131868349

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 450,000 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). Do Not Use Excel.

Reference no: EM131868349

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