QUESTION 2 [70 Marks] KG Entertainment plans to build and apen twa new thestres to be used for theatrical productions (400 seats in each) during the 2023 financial year. KG Entertainment plans to build and own fits theatrical theatres in the future and diversify into the movie theatre market. This change in strategy is motivated by the high cost of leasing theatical premises and establshing some form of diversification. The company has historically leased premises and lease agreements are generally for 10 -year periods with five-year renewal aptions. Commencial banks have adopted the wew that theatre buildings provide limited security For lovens due to their specialised nature and use. Shareholders and the exocutive boand are urwiling to provide personal suretyship to secure loans. In addition, they coonsider the inlerest rate to be very high in comperiscon to nommal property finance rates. The cinema and theatre industry has been facing stiff competition from digital streaming platforms such as Netfix, which affers a wide variety of eentent at an affordable price. E Noles: 1. KG sels: the majority of its ticket sales through an independent ticketing agent [Compu-seeh which has a national call centre and inlernet-based infrastrueture. 2. Commission of 4% is paid to Compu-gee. Doth the budgeled and actual ticketing agent commission for the 2023 financial year amounts to 45 of stad face walue of the tickets. Budgeled and actual altendance statistics and ticket sales are summarised below: 7 HPFM440-1-Jul-Dwc2073-SA2-LM-v6-0E062023 3. Constructon costs incured for stage props for new shows are expensed in the year in which they are incurred. 4. Buildings are deprecialed bver 20 years on a straight-line basis. 5. Utity, marketing, travelling and acoommodation and other oventead costs are Fived in nature. 6. Budgeled rental escalations sere 8% besed en the terms of lease agroements. 7. The majority of the traveling and accommodation costs relate to expenses inourred by cast members traveling to different cities and their accommodation costs. 9. Finance cost is fixed in nature:- Required: 2.1 Caloulate the number of tickets that need io be sold in the 2024 financial year to break even. Assume that bo\% of all ticket sales will bocur through the independent ticketing agent. (10 Marks)