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how many monthly subscribers required for CableVision

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Question - CableVision has been approached by the City of Mirada to run its cable operations in 2019. After negotiating with key parties, CableVision has made the following agreements:

  • It will offer Mirada residents a basic set of 25 cable television stations at a rate of $33.49 per month.
  • It will pay the city $1,300,000 per year plus $4.00 per cable subscriber per month to maintain the physical facilities.
  • It will actually pay another company a monthly fixed fee of $60,000 plus $8.25 per cable subscriber per month to broadcast the 25 channels.

CableVision estimates that operating costs for billing, program news mailings, etc. will be $110,000 per month plus 7% of monthly revenue.

CableVision has several questions about its monthly revenues, costs, and profits in 2019.

Required - Assuming a tax rate of 30%, how many monthly subscribers would be required for CableVision to earn $24,000 per month in 2019?

Reference no: EM132234266

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