Your company owns a minor league baseball team and is considering building a new stadium. The local governments refuse to help build the stadium, so you must fund it yourself. The stadium will cost $15,000,000 and will have a 20-year life span, after which it will be valueless. It will take a year to build, so you cannot use the stadium until the second year. You are planning to finance it with a loan. The loan will require that you make interest payments of $400,000 at the end of years one through five. At the end of year five, you will also have to make a balloon payment of the $15,000,000 principal. You expect that the operating profit from the new stadium will be $5,000,000 per year from the 2nd year (when the stadium will open) through the 21st year (when it will close). The accounting depreciation allowance will be $1,500,000 per year for the first 10 years, after which it will be zero. Your tax rate is 20 percent of your taxable profit. Your discount rate is 9 percent.

1. The net present value of building the stadium is $15,366,885.25 1 =-400,000 2-5 =(5,000,000- 400,000-1,500,000)*(1-0.20)=2,480,000 6-11=(5,000,000-1,500,000)*(1-0.20)= 2,800,000 12-21=(5,000,000)*(1-0.20)=4,000,000 These profits are discounted by 9%. You must also subtract the present value of the 15,000,000 balloon payment paid in five years. Consequently, the net present value is:

2. NPV= [1/(1.09)*(-400,000)] + 5Ej=2[1/(1.09)^j*(2,480,000)] + 11Ej=6[1/(1.09)^j*(2,800,0000] + 21Ej=12[1/(1.09)j*(4,000,000)] - [1/(1.09)^5*15,000,000]= 15,366,885.25

How do they get the answer for part two? Every time i calculate part two I get an different answer, like I am missing a step.