Essay About Scoreboard Analysisrate Of Return And Scoreboard Cost

Proposed Scoreboard Analysis
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Student Name: Akanksha Nayyar (211630084)                                                                                                     Class 3: MACC 6301 Section QProposed Scoreboard AnalysisRate of Return (after tax)10%Rate of Return (before tax)8%Scoreboard Cost $      560,000CCA Class 820%Tax Rate25%Net Income CalculationYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Scoreboard RevenueRegular Season Revenue $      120,000  $    120,000  $    120,000  $    120,000  $    120,000  $    120,000  $    120,000  $    120,000 Playoff Season Revenue* $        20,000  $      20,000  $      20,000  $      20,000  $      20,000  $      20,000  $      20,000  $      20,000 Total Revenue $      140,000  $    140,000  $    140,000  $    140,000  $    140,000  $    140,000  $    140,000  $    140,000 Scoreboard ExpensesMaintenance Costs $           3,000  $         3,000  $         3,000  $         3,000  $         3,000  $         3,000  $         3,000  $         3,000 Electricity Costs** $              560  $            560  $            560  $            560  $            560  $            560  $            560  $            560 CCA*** $      112,000  $       89,600  $       71,680  $       57,344  $       45,875  $       36,700  $       29,360  $       23,488 Total Expenses $      115,560  $       93,160  $       75,240  $       60,904  $       49,435  $       40,260  $       32,920  $       27,048 Net Income before Taxes $         24,440  $       46,840  $       64,760  $       79,096  $       90,565  $       99,740  $    107,080  $    112,952 Income Taxes $           6,110  $       11,710  $       16,190  $       19,774  $       22,641  $       24,935  $       26,770  $       28,238 Net Income after Taxes $         18,330  $       35,130  $       48,570  $       59,322  $       67,924  $       74,805  $       80,310  $       84,714 Net Present Value CalculationYear12345678PV of Net Income (discounted at rate of return) $         16,664  $       29,033  $       36,491  $       40,518  $       42,175  $       42,225  $       41,212  $       39,520 NPV $      287,838 NPV of Scoreboard $      287,838 Cost of Scoreboard $      560,000 Benefit or Cost of Scoreboard $    (272,162)Conclusion:As can be seen from the above calculations, there is no benefit in purchasing the scoreboard as the cost of the scoreboard ($560,000) exceeds the NPV ($287,838) by $272,162. If TBT wants to purchase this scoreboard, the company must increase its advertising revenue, assuming that costs cannot be changed. Assumptions: