Adams Countys Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the boards decision appear below.

Cost of acquiring additional land for runway	$	66,000
Cost of runway construction		255,000
Cost of extending perimeter fence		32,525
Cost of runway lights		34,000
Annual cost of maintaining new runway		17,000
Annual incremental revenue from landing fees		30,000

In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $125,000. The old snowplow could be sold now for $12,500. The new, larger plow will cost $8,500 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $84,000 per year in additional tax revenue for the county.

In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The countys hurdle rate for capital projects is 15 percent.

Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Problem 16-47 Internal Rate of Return; Sensitivity Analysis (Section 1) (LO 16-1, 16-3)

In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The countys hurdle rate for capital projects is 15 percent. The County Board of Representatives believes that if the county conducts a promotional effort costing $25,500 per year, the proposed long runway will result in substantially greater economic development than was projected originally. However, the board is uncertain about the actual increase in county tax revenue that will result.

Required:

Suppose the board builds the long runway and conducts the promotional campaign. What would the increase in the countys annual tax revenue need to be in order for the proposed runways internal rate of return to equal the countys hurdle rate of 15 percent?(Round intermediate and final answer to the nearest dollar amount.)

Required incremental benefit .....................................................................		?
Add: Annual costs to cover:
Promotional campaign ....................................................................	?
Runway maintenance ......................................................................	?
Incremental operating costs of new snow plow ................ ?
Total annual costs ...........................................................................		?
Subtotal ........................................................................................................		?
Deduct: Incremental revenue from landing fees ......................................	?
Required increase in tax revenue ..............................................................		?