A football club, Manpool, is considering investing in a new stadium. There are the following expected capital outlays and cash inflows for two prospective stadiums.

Assume the football club can borrow money at respectively:

(a) 5%

(b) 8%

(c) 10%

Required:

(i) Which stadium should be built and at which rate using net present value?

(ii) What is the internal rate of return for the two stadiums?

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Bowl Superbowl Year 000 000 Outlays 0 (1,000) (1,000) 1 (1,000) (1,000) Net inflows 1 50 300 2 100 300 3 4 150 300 200 300 10 567890 250 300 300 300 350 300 400 300 450 300 500 300