Here is the problem: The baseball team is interested in building


Question Description:

35

Here is the problem: The baseball team is interested in building a stadium. To go ahead with this development they must spend $100,000 for a land survey, $100,000 for building permits and $10,000,000 for its installation. The stadium will net the company an est. $3,500,000 each year over the 5-year life of the formula. Calculate the cost of capital (Rrf=5.65%, B=1.25, Rm=15%). Assuming that cash inflows at the end of the year. Calculate the NPV, and the Profitability Index(PI) for this project. Should this project be undertaken?

Answer

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