You run a school in Florida. Fixed monthly cost is $5,730.00 for rent and utilities, $6,137.00 is spent in salaries and $1,375.00 in insurance. Also every student adds up to $98.00 per month in stationary, food etc. You charge $704.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,709.00, salaries to $6,056.00 and insurance to $2,323.00 per month. Variable cost per student will increase up to $167.00 per month. However you can charge $1,122.00 per student. At what point will you be indifferent between your current mode of operation and the new option?

You run a school in Florida. Fixed monthly cost is $5,730.00 for rent and utilities, $6,137.00 is spent in salaries and $1,375.00 in insurance. Also every student adds up to $98.00 per month in stationary, food etc. You charge $704.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,709.00, salaries to $6,056.00 and insurance to $2,323.00 per month. Variable cost per student will increase up to $167.00 per month. However you can charge $1,122.00 per student. At what point will you be indifferent between your current mode of operation and the new option?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

You run a school in Florida. Fixed monthly cost is $5,730.00 for rent and utilities, $6,137.00 is spent in
saiaries and $1,375.00 in insurance. Also every student adds up to $98.00 per month in stationary,
food etc. You charge $704.00 per month from every student now.
You are considering moving the school to another neighborhood where the rent and utilities will
increase to $11,709.00, salaries to $6,056.00 and insurance to $2,323.00 per month. Variable cost per
student will Increase up to $167.00 per month. However you can charge $1,122.00 per student. At
what point will you be indifferent between your current mode of operation and the new option?

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