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Power Brokers, Inc. ( PBI ) , a discount brokerage firm, is contemplating opening a new regional office in Providence, Rhode Island. An accounting cost

Power Brokers, Inc. (PBI), a discount brokerage firm, is contemplating opening a new regional office in Providence, Rhode Island. An accounting cost analysis of monthly operating costs at a dozen of its regional outlets reveals average fixed costs of $4,500 per month and average variable costs of AV C = $59 $0.006Q where AV C is average variable costs (in dollars) and Q is output measured by number of stock and bond trades. A typical stock or bond trade results in $100 gross commission income, with PBI paying 35% of this amount to its sales representatives (i.e., this payment leaves the office). Do not use derivatives. Be sure to show your work. (a) Estimate the trade volume necessary for PBI to break even on a monthly basis at a typical office. (b) Estimate the trade volume necessary for PBI to reach a target return of $7,500 per month for a typical office.

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