Temple University is considering a new Football stadium. It will cost $38700000.

Question

Temple University is considering a new Football stadium. It will cost $38700000. They anticipate that it will also cost $4920000 per year to maintain. They will build it as soon as they have enough donations to cover the cost of building and maintaining it indefinitely. Assuming a MARR of 5.6% per year, and using the Capitalized Worth Method find the amount of donations they must collect? $

The University is also considering building a parking lot. It will cost $1249000. The revenue from parking will cover the expenses, but it will have to be completely replaced every 10 years at an equal cost. Using the same MARR as above and the CW method calculate the amount of money they must raise to keep the parking lot indefinitely.

Explanation / Answer

CAPITALIZED COST OF NEW FOOTBALL STADIUM: First cost 38700000 PW of annual maintenance cost = 4920000/5.6% = 87857143 Amount of donations to be collected 126557143 PARKING LOT: First cost 1249000 AW of replacements = 1249000*0.056/(1.056^10-1) 96554 PW of replacements = 96554/0.056 = 1724179 Amount of money to be raised for the parking lot 2973179

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