Assume that the local minor league sports team has recently requested that the governmetn build it a new stadium. The team has provided documentation regarding how much a new stadium will add to the local economy and has hinted that it may leave if the stadium is not built. What approach should the government use to evaluate such a project and make a decision on whether to fund it?
For evaluation of any project government needs to see the economic and social benefit it gets out of it .
one of the approach is to see the cash flow the project generates through sale of tickets , advertising , benefit to the local economy and how much tax it can achieve from that increase revenue generation of local economy.
If the cash flow generated is more than the value of investment ,beats the inflation and risk free rate and also doesn't harm any stakeholders and environment then government can fund the same.
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