Case Study 2 Financing & Budget
Case Study #2: Softball Batting Cage
You are on the Park Board for the Oxford-Lafayette County Ameritrade/FNC Park. The board has been searching for ways to add services at the community multisport complex. According to board policy, adult activities such as softball must pay for themselves, this includes capital development costs….
see attachment
Your sports director proposes installing a softball batting cage with pitching machine at the complex. The total cost to purchase and install the equipment will be $15,000. Annual maintenance is estimated to start at $400 per season and to increase 12% each year. Utilities are expected to begin at $350 per season and will increase 3% each year. New softballs will be needed after the initial season. They are expected to cost at least $120 per year.
The director estimates that initially 48 people a night will pay $.75 each to use the batting cage. The Director developed her estimates based on a 120 day season. They estimate that use of the batting cage will increase 10% each year.
The Board has a long term plan for the area under consideration. In five years, the entire complex will be renovated and the batting cages will be expanded to include indoor batting cages with a total of 4 machines. The $15,000 for the ball machine would have to come out of funds currently being generated for the future development.
Questions
1. Using benefit /cost analysis (B-E, then whatever is over, is benefit), would this investment be initially justified? Over 3 years over 5 years?
2. Are there any additional benefits not considered in this analysis?
(SWOT)
3. What are the B-E points if costs per use were .75 per, $1.00 per, $1.25 per, and 1.50 per.
4. In 2022, how many uses would you need to achieve to make a $5000 Profit fr .75, 1.00, 1.25, 1.50 per use?
4. If the purpose of the investment was the help raise money for the future development –would the investment be a good investment within 3 years charging reasoanble prices (you MUST justify, what is a reasoable cost per use)?
5. How do you increase batting cage use increase from 10% a year to 15% a year?
a. What are the dimensions of Use?
b. How is “use” associated with “Best Quality, Most community served, at Lowest Cost”?
6. Develop a Break-even analysis using the figures above-
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