QUESTION 27 Doris M. Bradey has invested $1,200,000 in a small (280 seat) theatre. All of this monoyshould be considered her nvestment. She would lke to see a 10% after-tax rutum on her investment in the coming year. Doris faces a personal tax rate of 38% She expects the theatre soats to be sold at a 75% capacity on average, and that in this year the theotre will be open on 130 nights. There are many costs involvda in running a theatre. Estimates indicate that variable costs will use 70% of the revenue earned by the theatre Fxed costs would be Salaries $420,000 Insurance 40,000 License 15,000 Utties 110,000 Also, depreciation on the theatre building itself would be 10% of the building's $800,000 current book value Part of Doris' investment (included in the $1,200,000 mentioned above) in the theatre came through a bank loan of $250,000, on which she will be paying 5% interest this year REQUIRED A Please calculate the total amount of revenue that this theatre will need to eam this yoar, in order to meet all costs and allow for Doris' expected after tax return.

QUESTION 27 Doris M. Bradey has invested $1,200,000 in a small (280 seat) theatre. All of this monoyshould be considered her nvestment. She would lke to see a 10% after-tax rutum on her investment in the coming year. Doris faces a personal tax rate of 38% She expects the theatre soats to be sold at a 75% capacity on average, and that in this year the theotre will be open on 130 nights. There are many costs involvda in running a theatre. Estimates indicate that variable costs will use 70% of the revenue earned by the theatre Fxed costs would be Salaries $420,000 Insurance 40,000 License 15,000 Utties 110,000 Also, depreciation on the theatre building itself would be 10% of the building's $800,000 current book value Part of Doris' investment (included in the $1,200,000 mentioned above) in the theatre came through a bank loan of $250,000, on which she will be paying 5% interest this year REQUIRED A Please calculate the total amount of revenue that this theatre will need to eam this yoar, in order to meet all costs and allow for Doris' expected after tax return.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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