AMC Theaters has recently introduced an A-Listers program. Signing up for the A-lsters program costs $19.95 per month (with a minimum 3-month commitment) and allows you to watch up to 3 movies per week at no additional cost. You can watch any movies including premium movies (ones on bigger screens like IMAX) at no additional cost. Required Homework Questions (4 parts A-D) Assume AMC has estimated the following costs to be required as a result of the new A-listers program 1. Programming for initial setup of A-list website and app: $18,0C0,000 (AMC will depreciate this cost over 3 years using straight line depreciation) 2. Recurring monthly costs to maintain A-list website and app: $110,000 3. Pay for one additional employee to check tickets/ provide customer service help at each theater because of increased demand from A-list members: The cost for each additional employee to AMC is $22 per hour. Assume AMC has 600 theaters and operates each theater for an average of 12 hours per day 365 days a year 4. Lost revenue from A-list members who would otherwise spend more than $19.95 per month on movies tickets and from non A-list members who are unable to watch a movie because of increased demand from A-list members. Because there is some uncertainty about how to estimate this, AMC has decided to use three separate estimates for lost revenue per A-list subscriber per month: $5, $10 and $15. A. Using the information provided above calculate the breakeven point for the three separate estimates for average lost revenue per month for each A-list subscriber B. Assurme AMC requires a 14% rate of return on any investment after taxes. Assume AMC is subject to an average tax rate of 25%. If there are 725,000 A-list subscribers will the A-list program achieve the desired rate of return on their A-list program for each of the possible lost revenue amounts per A-list subscriber listed in part A? C. Assume that AMC decides to offer 2 different levels of the A-listers program, the standard for $19.95 a month that allows the user to watch 3 movies a week and a deluxe version for $39.95a month that allows unlimited movie viewing. Assume a mix of 75% standard A-list subscribers and 25% deluxe A-list subscribers if these two products are both offered. Also assume the average lost revenue per subscriber is $10 per month for the standard A-list subscriber and $20 per month for the deluxe A-Hist subscriber(assume no other costs change). What is the new break-even point using these assumptions? D. Would instituting the new A-list program be likely to change the operating leverage at AMC theaters? What factors would determine the impact of instituting the new A-list program on the overall operating leverage of AMC