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1) Athletic department is thinking of replacing scoreboard at football stadium. It will cost= $2.4M to buy and install scoreboard. Scoreboard will have the expected useful life of= 15 years and is depreciated by using straight line method. At T=15, scoreboard will have the salvage value of $100,000, and present scoreboard has the salvage value of= $20,000. New board is expected to generate the extra= 5,000 fans per season at the average ticket price of= $20. Athletic department will also be able to sell extra advertising totalling= $200,000 per season. Though, electric cost for new board will be= $55,000, compared to present usage of= $5,000. University feels that alternate projects could return= 8%. The university also pays no taxes. Should department purchase scoreboard at football stadium?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M914972

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