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Mama L [17]
2 years ago
12

A city that is attempting to attract a professional football team is planning to build a new stadium costing $500 million. Annua

l upkeep is expected to amount to $1,000,000 per year. The artificial turf will have to be replaced every 20 years at a cost of $2,000,000. Painting every 5 years will cost $250,000. If the city expects to maintain the facility indefinitely, what will be its capitalized cost at an interest rate of 10% per year
Business
1 answer:
garik1379 [7]2 years ago
6 0

Answer:

Capitalized cost = - $510,758,686.20

Explanation:

Interest rate = r = 10%, or 0.10

Present value of base cost = $500 million = $500,000,000

Present value of annual upkeep =  $1,000,000 / r = $1,000,000 / 0.10 = $10,000,000

Present value of the replacement cost of artificial turf  every 20 years = ($2,000,000 * (r / (((1 + r)^20) - 1)) / r = ($2,000,000 * (0.10 / (((1 + 0.10)^20) - 1)) / 0.10 = $349,192.50

Present value of painting every 5 years = ($250,000 * (r / (((1 + r)^5) - 1)) / r = ($250,000 * (0.10 / (((1 + 0.10)^5) - 1)) / 0.10 = $409,493.70

Therefore, we have:

Capitalized cost = - Present value of base cost - Present value of annual upkeep - Present value of the replacement cost of artificial turf  every 20 years - Present value of painting every 5 years = - $500,000,000 - $10,000,000 - $349,192.50 - $409,493.70 = - $510,758,686.20

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Were the results different between the financial analysis (Question 1) and the weighted scoring model (Question 2) approach? If
valina [46]

Answer:

Financial analysis can be understood as the process of assessing the productivity and appropriateness of firms, initiatives, finances, and other financial activities. Financial analysis is often done to determine whether or not a company is secure, stable, liquid, or lucrative enough to support a financial investment.

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3 0
2 years ago
You notice that​ Coca-Cola has a stock price of $ 40.68 and EPS of $ 2.04. Its competitor PepsiCo has EPS of $ 3.43. ​But, Jones
Finger [1]

Answer:

Estimate Value of a share= $71.81

Explanation:

<em>The value of a share can be determined using the price earning  ratio model. According to this model, the price of a share is estimated as the EPS of the company multiplied by a representative P/E ratio.</em>

Value of share = EPS × P/E

The appropriate P/E ratio would be that of a similar operator in the same industry, in this case , Jones Soda.

Hence the estimate value of share =2.04 × 35.2=71.81

Estimate Value of a share= $71.81

7 0
3 years ago
Which of these statements defines the term resources?
sineoko [7]
The correct answer to that question would be A. Materials that help you acheive goals.
8 0
3 years ago
Read 2 more answers
A company with 100,000 authorized shares of $7 par common stock issued 46,000 shares at $16. Subsequently, the company declared
liq [111]

Answer:

$27,600

Explanation:

Amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend:

= Shares issued * Percentage of stock dividend * Market price

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= $27,600

4 0
3 years ago
Journal EntryThe company has an unadjusted debit balance in Accounts Receivable of $25,000 and an unadjusted credit balance of $
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Answer:

Sales Discounts 190 debit

   Allowance for Sales Discounts  190 credit

Explanation:

From the current accounts receivable, the company has 10,000 within discount period and t expect the customer will take them so:

10,000 x 2% = 200 expected discount

currenly the accouting balance for the expected discount is 10 so:

200 - 10 = 190 allowance for sales discounts adjustment.

Remember we do this adjustment to match the expenses or discount withthe period they are generated. Not doing so, will imput discount to the next period for transaction which occurs in the current one.

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3 years ago
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