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:
Essay About Scoreboard Analysisrate Of Return And Scoreboard Cost
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Latest Update: July 9, 2021
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