Cory's Garage Problem Location: downtown Detroit Issue: bank loaned $18 million to build a 12-story parking garage with 755 parking spots based on revenue projections of $15/day, 80% occupancy rate Actual revenue results: $12/day, about 80 cars a day (10% occupancy rate) Question: How many cars need to park there every day for Cory to get his interest payments? Extend the question to include ALL cash expenses (no depreciation). Cash Expenses: Interest-only loan (no principle for 5 years): 74% Property tax: 1.8 mil rate (-1.8% of property value) Security/Booth: 2 FTEs, minimum wage ($6.95/hr in 2006 which was the year this actually took place) + benefits (25% load rate). 24 hrs/day, 365 days a year Electricity: about $1.000 per month Other: cleaning, maintenance, liability insurance: about $1,000 per month 12 1) What is the CM/unit 0 > 12 2) What is breakeven point in units) for the year just on the interest? a) What is breakeven point per day, if we use 365 days? b) What is the breakeven point per day if we include only weekdays? 3) What is breakeven point in units) for the wear on all cash expenses? 4) Considering all cash expenses, by how many units would the breakeven point for the year decline if the garage could get $15 per day rather than $12/day. 5) Given the projections at the time, was the loan a wise decision? What was the projected revenue? What was the projected net cashflow per year before income tax)