Number of tickets to be sold to service the debt
Not what you're looking for?
The Florida Boosters Association has decided to build new bleachers for the football field. Total costs are estimated to be $1million, and financing will be through a bond issue of the same amount. The bond will have a maturity of 20 years, a coupon rate of 8% and has annual payments In addition, the Association must set up a reserve to pay off the loan by making 20 equal annual payments into an account that pays 8% annual compounding. The interest-accumulated amount in the reserve will be used to retire issue at its maturity 20 years hence. The Association plans to meet the payment requirements by selling season tickets at a $10 net profit per ticket. How many tickets must be sold each year to service the debt ( to meet the interest and principal repayment requirements) ?
Purchase this Solution
Solution Summary
The solution answers the question below.
Solution Preview
Cost of the project - $ 1 million.
Interest on borrowings - 8% means annual interest cost is $ 80,000
principal Repayment yearly into reserve account = $1000000/20 = $50,000
Minimum earnings should be = $ 80,000 + $ 50,000 = $ 130,000
Net profit per ticket = $10
Number of ...
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.