The City of Los Angeles is considering building a new stadium to attract a new NFL expansion team. The stadium would be financed by floating a $500,000,000 bond issue that pays interest only on an annual basis at 9%. The principal will need to be repaid in 20 years. If the City builds the stadium, it is guaranteed the expansion team. The team will pay $35,000,000 per year rental on a 20 year fixed rate lease. The City also expects to generate $40,000,000 of revenue per year from hosting other venues, such as concerts, during the first 10 years, and $60,000,000 per year the next ten years. The annual maintenance costs of the stadium are expected to average 15% of gross annual revenues. In addition, it is expected that the stadium will need to be refurbished in 10 years at a cost of $100,000,000. At the end of 20 years, the City will dedicate the stadium to the U.C. Board of Regents for a single payment of $200,000,000 that the City will use to help defray the bond retirement Should the Stadium be built? Discount Rate - 10%