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I need solutions for these please! a. New Age Cable Inc New Age Cable Inc has been approached by the city of Braville (population 120,000)
I need solutions for these please!
a. New Age Cable Inc New Age Cable Inc has been approached by the city of Braville (population 120,000) to provide television service to the city. Braville city officials have become tired of reporting losses on the cable television company they have operated for the past five years. New Age Cable Inc currently operates cable television facilities for over one hundred other cities or counties in the U.S and Canada. The existing city facilities have the capacity to serve 40,000 subscribers. New Age Cable Inc makes planning assumptions after negotiations with key parties as follows: A basic set of 15 cable television stations will be offered at a rate of $25 per month per subscriber. These fifteen stations include a sports channel, a news channel, and other general audience channels. b. The city of Braville would retain ownership of the physical facilities and would maintain them in working condition. Under a leasing agreement, New Age Cable Inc will pay the city of Braville $60,000 per month plus 10% of each subscription revenue. New Age Cable Inc will receive the fifteen channels in its basic service from Interlink Cable; Interlink acts as an intermediary between cable television stations and companies such as New Age Cable Inc, which sell to individual subscribers. Interlink charges a monthly fixed fee of $25,000 plus a monthly charge of $8 per subscriber. d. New Age Cable Inc estimates its own operating costs to include both a fixed and a variable component. The fixed component is $65,000 per month. The variable cost per subscriber is $2.50 per month (to cover monthly billing, program news mailings, and so on). The company tax rate will continue to be 45%. Required: (Treat each case independently. Use the original data unless otherwise stated) i. How many subscribers per month does New Age Cable Inc need in Braville to break- even? ii. If the price is reduced by 20%, management expects to serve 35,000 subscribers. What is c. e. net 111. iv. income or loss that New Age Cable Inc can expect if costs stay at current levels? New Age Cable Inc is considering replacing a labour-intensive process in the billing area with an automatic machine. This will increase monthly fixed costs by 23,000 but cut the billing, program news mailing etc costs by 40%. Compute the sale volume in dollars that would be required to earn a net income of $13,750. The village of Tuville which is close to Braville has offered to buy 15,000 subscriptions per month at $20 per subscription. The offer must be accepted or rejected in its entirety. Assume that costs and rates will stay at the planned levels, and that subscriptions from the city of Braville are expected to be 30,000. What net income will New Age Cable Inc make if it takes the Tuville offer but does not increase the capacity of the existing facilitiesStep by Step Solution
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