7. The City of Greenville has decided to build a softball complex on land donate

Question

7. The City of Greenville has decided to build a softball complex on land donated by one of the city residents. The city council has already voted
to fund the project at a level of $800,000 (initial capital investment). The city engineer has collected the following financial information for the project.
• Annual upkeep costs: $120,000
• Annual utility costs: $13,000
• Renovation costs: $50,000 for every 5 years
• Annual team user fees (revenues): $32,000


If the city expects 40,000 visitors to the complex each year, what should be the minimum ticket price per person, Interest rate: 5%.
so that the city can break even? • Useful life: Infinite •

Thaank You so much!!

Explanation / Answer

$800,000 (initial capital investment). The city engineer has collected the following financial information for the project. • Annual upkeep costs: $120,000 • Annual utility costs: $13,000 • Renovation costs: $50,000 for every 5 years • Annual team user fees (revenues): $32,000 120K + 13K + 50K = 183,000 * 5% = 192150 cost 32,000 + 40,000(3.5) = 32,000 + 140,000 = 172,000*5%=180,600 min rev (inflation) 32,000 + 40,000(4.0) = 32,000 + 160,000 = 192,000*5%=201,600 max rev (inflation) $3.50

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