Contemporary Engineering Economics 6th Edition by Chan Park

تمرين 13

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, press-room 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