Question 5.6 A publishing company considers introducing a new morning newspaper. Its direct competitor charges $0.25 at retail. The fixed cost of editors, reporters, rent, pressroom expenses, and wire-service charges to be $350,000 per month. The variable cost of ink and раper is $0.08 per copy, but advertising revenues of $0.05 per paper will be generated. To print the morning paper, the publisher has to purchase a new printing press, which will cost $620,000. The press machine will be depreciated according to a seven-year MACRS class. The press machine will be used for 10 years, at which time its salvage value would be about $100,000. Assume 365 issues per year, a 27% tax rate, and a 13% MARR. How many copies per day must be sold to break even at a retail selling price of $0.20 per paper? A) 81,345 copies per day B) 72,427 copies per day C) 63,843 copies per day D) Answers A, B and C are not correct

Question 5.6 A publishing company considers introducing a new morning newspaper. Its direct competitor charges $0.25 at retail. The fixed cost of editors, reporters, rent, pressroom expenses, and wire-service charges to be $350,000 per month. The variable cost of ink and раper is $0.08 per copy, but advertising revenues of $0.05 per paper will be generated. To print the morning paper, the publisher has to purchase a new printing press, which will cost $620,000. The press machine will be depreciated according to a seven-year MACRS class. The press machine will be used for 10 years, at which time its salvage value would be about $100,000. Assume 365 issues per year, a 27% tax rate, and a 13% MARR. How many copies per day must be sold to break even at a retail selling price of $0.20 per paper? A) 81,345 copies per day B) 72,427 copies per day C) 63,843 copies per day D) Answers A, B and C are not correct

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 14PROB

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