Number of seats
Class 1 seats
Class 2 seats
The team will play 50 home games each season. Total added operating costs per game (ushers, cleanup, and depreciation) are expected to average $11,800. All such costs, except depreciation, require cash outlays.
1. By using the net present value method and a 16% desired rate of return, determine whether the expansion should be undertaken.
2. In addition to the cash flows presented here, what other cash flows might change if the Eskimos add on to the arena?
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