The Rocky Mountain Publishing Company is considering

introducing a new #4902

The Rocky Mountain Publishing Company is considering introducing a new morning newspaper
in Denver. Its direct competitor charges $0.25 at retail with $0.05 going to the retailer. For the
level of news coverage the company desires, it determines the fixed cost of editors, reporters,
rent, press-room expenses, and wire-service charges to be $300,000 per month. The variable
cost of ink and paper is $0.10 per copy, but advertising revenues of $0.05 per paper will be
generated. To print the morning paper, the publisher has to purchase a new printing press,
which will cost $600,000. The press machine will be depreciated according to a seven-year
MACRS class. The press machine will be used for 10 years, at which time its salvage value
would be about $ 100,000. Assume 300 issues per year, a 40% tax rate, and a 13% MARR.
How many copies per day must be sold to break even at a retail selling price of $0.25 per
paper?View Solution:
The Rocky Mountain Publishing Company is considering introducing a new

ANSWER
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