Some sport's teams as football teams, baseball teams, basketball teams fund stadiums, ball diamonds, and coliseums with bonds. For instance, the Cleveland Browns Team spent $283,000,000 for the new stadium. The Dallas Cowboys Franchise spent $1.2 billion on their new stadium. The Cleveland Browns issued bonds to fund their stadium, whereas the Dallas Cowboys sold seats to finance the new stadium. We will assume that the Cleveland Browns Team desires to build a dome stadium similar to the Dallas Cowboys for our class. The cost of the dome is $1.3 billion. If the interest rate is 5% and the period is seven years, how much must the Cleveland Browns issue in bonds to fund the stadium? PV = FV / (1+r)^n = $1,300,000,000 / (1+0.05)^7 =$1,300,000,000 / (1.05)^7 =$1,300,000,000 / 1.41 =$921,985,815.60 Did you get the same answer? What is the present value if we consider the rates of 5% and 9%? What do you see from comparing the present value using 5%, 7%, and 9%?
Some sport's teams as football teams, baseball teams, basketball teams fund stadiums, ball diamonds, and coliseums with bonds. For instance, the Cleveland Browns Team spent $283,000,000 for the new stadium. The Dallas Cowboys Franchise spent $1.2 billion on their new stadium. The Cleveland Browns issued bonds to fund their stadium, whereas the Dallas Cowboys sold seats to finance the new stadium. We will assume that the Cleveland Browns Team desires to build a dome stadium similar to the Dallas Cowboys for our class. The cost of the dome is $1.3 billion. If the interest rate is 5% and the period is seven years, how much must the Cleveland Browns issue in bonds to fund the stadium? PV = FV / (1+r)^n = $1,300,000,000 / (1+0.05)^7 =$1,300,000,000 / (1.05)^7 =$1,300,000,000 / 1.41 =$921,985,815.60 Did you get the same answer? What is the present value if we consider the rates of 5% and 9%? What do you see from comparing the present value using 5%, 7%, and 9%?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Some sport's teams as football teams, baseball teams, basketball teams fund stadiums, ball diamonds, and coliseums with bonds. For instance, the Cleveland Browns Team spent $283,000,000 for the new stadium. The Dallas Cowboys Franchise spent $1.2 billion on their new stadium. The Cleveland Browns issued bonds to fund their stadium, whereas the Dallas Cowboys sold seats to finance the new stadium. We will assume that the Cleveland Browns Team desires to build a dome stadium similar to the Dallas Cowboys for our class. The cost of the dome is $1.3 billion. If the interest rate is 5% and the period is seven years, how much must the Cleveland Browns issue in bonds to fund the stadium?
PV = FV / (1+r)^n
= $1,300,000,000 / (1+0.05)^7
=$1,300,000,000 / (1.05)^7
=$1,300,000,000 / 1.41
=$921,985,815.60
Did you get the same answer? What is the present value if we consider the rates of 5% and 9%? What do you see from comparing the present value using 5%, 7%, and 9%?
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