Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 17

The rising cost of athletic programs at major universities has induced college presidents and athletic directors to devise innovative ways to finance cash strapped sports programs. One of the latest schemes for big-time athletics is the "sports mortgage." At the University of Kansas, Jayhawk fans can sign up to pay $105,000 now, or over a 10-year period, for the right to buy top seats for football games during the next 30 years. In return, the seats themselves will stay locked in at current-year prices. Season tickets in tier 1 are currently selling for $350 each. A fan plans to purchase the sports mortgage along with a current-season ticket and pay for both now , then buy a ticket each year for the next 30 years. What is the total present worth of the pricing plan at an interest rate of 10% per year