Bryan Bessner has invested $600,000 in a small theatre. He would like to see a 10% after-tax return on his investment this year. Bryan faces a personal tax rate of 40%. There are many costs involved in running a theatre. Estimates indicate that variable costs will use up 67% of the revenue earned by the theatre. Fixed costs would be:

Salaries$572,000 Insurance. 30,000 License 8,000 Utilities 24,000

Also, depreciation on the theatre building itself would be 10% of the buildings $1,000,000 book value. Part of Bryans investment in the theatre was used to buy equipment, costing $175,000. This equipment depreciates by 20% per year.

Part of Bryans investment in the theatre came through a bank loan of $200,000, on which he will be paying 8% interest this year.

REQUIRED: a. Please calculate the total amount of revenue that this theatre will need to earn this year, in order to meet all costs and allow for Bryans expected after-tax return. b. If the theatre has 250 seats, and Bryan expects it to be open 4 nights per week for 50 weeks of the year, find the average seat price that must be charged in order to reach the revenue goal you calculated in part an above. Assume that on average, only 80% of seats can be sold each night.