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A theater in Davao City is considering the installation of an air conditioning system which is believed will increase attendance by an average of 100
A theater in Davao City is considering the installation of an air conditioning system which is believed will increase attendance by an average of 100 persons a day. The average charge per person is P8.00, and the theater is in operation 300 days each year. The system would cost P600,000 installed, and it is estimated that the average maintenance cost would be P12,000 per year. Based on the performance of similar systems, the daily operation cost would be P200 and the estimated life is 10 years. Taxes and insurance would be 3.5% of the first cost. For depreciation, assume that money can be invested at 12% compounded annually, If the theater is nor making a profit of 15% on its investment, would you recommend the installation of the system
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