Question
A college in the Midwest is thinking about opening a new sports field. Since their football team is very popular, they calculate that they could
A college in the Midwest is thinking about opening a new sports field. Since their football team is very popular, they calculate that they could get on average 20,000 fans every game during each semester. Each semester the team will play eight local games. Ticket price on average is $50 per ticket. Consider that the college may keep 70% of the ticket profits and would need to use the other 30% for team expenses. Determine the rate of return for this project if the cost of the arena is $75,000,000. a. Consider an infinite number of periods. b. Consider a project life of 25 years. c) Determine the IRR per semester and the yearly effective rate of return.
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