Prospective owner of an nba franchise

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Reference no: EM131405350

You are the prospective owner of an NBA franchise. Your intent is to buy a team and own it for 15 years. Go to the below website to get your data. Pick any team that does NOT show a negative operating income.

https://www.forbes.com/nba-valuations/list/#tab:overall

1. Derive the team's after-tax cash flow for the most recent season, assuming a tax rate of 40%. Show your work on a spreadsheet. Important note: The only cost listed by the website is the player payroll. However, you can figure out the franchise's other costs because its operating income is listed. Assume that the franchise is going to depreciation its player payroll over a 15-year period to get its depreciation expense.

2. Assume the after-tax cash flow will not change over the next 15 years. Assume the after-tax interest rate is 4%. Show the discounted present value of the after-tax cash flow.

3. How much would you be willing to pay to own this franchise?

Reference no: EM131405350

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