The Rocky Mountain Publishing Company isconsidering introducing a new morning newspaper inDenver. Its direct competitor charges $0.25 at retailwith $0.05 going to the retailer. For the level of newscoverage the company desires, it determines the fixedcost of editors, reporters, rent, pressroom expenses,and wire-service charges to be $300,000 per month.The variable cost of ink and paper is $0.10 per copy,but advertising revenues of $0.05 per paper will begenerated. To print the morning paper, the publisherhas to purchase a new printing press, which will cost$600,000. The press machine will be depreciatedaccording to a seven-year MACRS class. The pressmachine will be used for 10 years, at which time itssalvage value would be about $100,000. Assume 300issues per year, a 40% tax rate, and a 13% MARR.How many copies per day must be sold to break evenat a retail selling price of $0.25 per paper?
The Rocky Mountain Publishing Company is
considering introducing a new morning newspaper in
Denver. Its direct competitor charges $0.25 at retail
with $0.05 going to the retailer. For the level of news
coverage the company desires, it determines the fixed
cost of editors, reporters, rent, pressroom expenses,
and wire-service charges to be $300,000 per month.
The variable cost of ink and paper is $0.10 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
$600,000. 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 300
issues per year, a 40% tax rate, and a 13% MARR.
How many copies per day must be sold to break even
at a retail selling price of $0.25 per paper?
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