8.8 A regional economic development authority is considering the construction of a new sports stadium. The authority wishes to attract a professional team for its potential economic benefits, and to serve citizens who want more recreational opportunities. The stadium would also be available for use by local educational institutions and for special events. The authority wishes to compare the costs and revenues of conventional and domed stadiums. The following estimates are available for this comparison:

\begin{tabular}{|c|c|c|} \hline & Conventional Stadium & Domed Stadium \\ \hline Period of analysis & 50 years & 50 years \\ \hline Discount rate & 5% & 5% \\ \hline Initial construction cost & $50 million & $300 million \\ \hline Salvage value & $5 million & $5 million \\ \hline Economic life & 50 years & 50 years \\ \hline O\&M & \begin{tabular}{l} $75,000 increasing by \\ $8,000 per year \end{tabular} & \begin{tabular}{l} $300,000 increasing by \\ $10,000 per year \end{tabular} \\ \hline \begin{tabular}{l} Periodic major renovation \\ costs \end{tabular} & $100,000 every 4 years & $800,000 every 10 years \\ \hline \begin{tabular}{l} Projected annual net \\ revenue, after sales costs \end{tabular} & \begin{tabular}{l} $3 million, increasing by \\ $100,000 per year through \\ Year 15 , then constant \end{tabular} & \begin{tabular}{l} $3.5 million, increasing by \\ $300,000 per year through \\ Year 15 , then constant \end{tabular} \\ \hline \end{tabular}