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Jefferson City has decided to build a downtown parking garage to house city employee's vehicles. Since the city has to demolish several buildings on the site, the project will take five years to complete. The city expects to save $30,000.00 a year once the project is completed. Using a 5% discount rate, determine the present value (PV) of the $30,000.00 savings at the end of the five year period.
The Jefferson City Council is contemplating selling a building that is currently leased to Dr. Tarria Whitley, a local veterinarian, for $95,000.00. Whitley leases the
building for $900.00 per month and is currently on a six year annually renewed lease with the option to buy the property at the close of the lease for $45,000.00. Using the present value formula and a 6% discount rate, calcu-late the total benefit of the leasing option and compare it with the option to sell the property.
Jefferson City has decided to invite an orchestra to play in the city's museum. Your job is to calculate the cost of an individual ticket in order for the city to break even on sales. The city estimates that their total fixed costs are $300,000. The variable cost is $20.00 per ticket.
A. If the city sets the price of the ticket at $75.00, how many tickets does the city need to sell in order to break even?
B. If the city set the price of the tickets at $50.00, how many tickets does the city need to sell in order to break even?