A national newspaper publishing group is considering introducing a new morning newspaper in Denver. Its direct competitor charges $0.75 per copy at retail, with $0.15 going to the retailer. For the level of news coverage the company desires, the fixed cost of editors, reporters, rent, press-room expenses, and wire-service charges are determined to be $300,000 per month. The variable cost of ink and paper is $0.20 per copy, but advertising revenues of $0.10 per paper will be generated. To print the morning paper, the publisher has to purchase a new printing press, which will cost $600,000. TI1e press machine will be depreciated according to the method for the seven-year MACRS class. The press machine will be used for 10 years, at which time its salvage value will be about $100,000. Assume 25 weekdays of printing in a month, a 40% tax rate, and a 12% MARR.How many copies per day must be sold at a selling price of $0.50 per copy at retail in order for the publishing group to break even?
A national newspaper publishing group is considering introducing a new morning newspaper in Denver. Its direct competitor charges $0.75 per copy at retail, with $0.15 going to the retailer. For the level of news coverage the company desires, the fixed cost of editors, reporters, rent, press-room expenses, and wire-service charges are determined to be $300,000 per month. The variable cost of ink and paper is $0.20 per copy, but advertising revenues of $0.10 per paper will be generated. To print the morning paper, the publisher has to purchase a new printing press, which will cost $600,000. TI1e press machine will be depreciated according to the method for the seven-year MACRS class. The press machine will be used for 10 years, at which time its salvage value will be about $100,000. Assume 25 weekdays of printing in a month, a 40% tax rate, and a 12% MARR.
How many copies per day must be sold at a selling price of $0.50 per copy at retail in order for the publishing group to break even?
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