You are the A.D at a Local High School and believe the renovation of your basketball arena will help sell more tickets, bring in more sponsors, and be better for athlete/fan experience . The school superintendent has said that he would be open to the idea but has other projects being presented and cannot afford to accept all of them. He asked you to put together a plan for your project so he can present it to the School Board.

1. The original plan from the contractors says that the renovation will cost about six million dollars and include new court, new seating, locker rooms, press box, weight room, and athletic training facility. The maintenance and operations cost of this facility will be about $750,000.

2. The athletic boosters club believes they can raise $500,000 to contribute to the construction costs. Additionally they can contribute about $10,000 a year from camps and fundraisers for operations.

3. A local soft drink company has agreed to pay for the new score boards and video boards for the project if they can get an exclusivity of beverage sales in the arena. They will also pay you $25,000 a year for exclusive advertising rights in the arena until it is paid off.

4. You project that you can increase ticket sales and marketing profits by about $30,000 a year.

5. The high school is located in a suburb and has a strong support for all of the sports programs.

6. The total assessed value of all the property in the suburb is about $375,000,000.

7. The assessment ratio for the area is 5% for a residential home and 8% for commercial property.

8. You believe you can get the district to agree to a bond that is backed by property taxes. The school board informs you that there is a rule that only half of the construction cost and half of the operations cost can be taken from tax payers money. The other half of operations will be covered by the school from concessions, gate receipts, fundraising, etc. It does not need to be included in the payback calculations.

The superintended wants you to present the following numbers on an excel file so he can take it to the school board and district administrators.

A. The payback period, discounted payback period, NPV, IRR, and MIRR (remember these would be after you issued the bond).

B. What is the bond that you hope to issue. (the standard interest rate is 6% for a 20 year term.)

C. How much will taxes need to be increase to cover the construction and operations cost of the arena?

D. How much will taxes increase for a private resident who owns $400,000 in property?

E. How much will taxes increase for a business owner that has 1.2 million in commercial property?