8.1 David Willis is considering opening up a new copy center store near a large

university. If he does, he will rent six machines for $1,200 per month for each machine. Rent, utilities, and wages will total $2,000 per month. Davids cost of paper and ink is $0.01 per copy, and he plans to charge $0.05 per copy.

a) What is his break-even point? (230,000 copies per month)

b) Suppose that David thinks he can get by with only four machines. What will his break-even point fall to? (170,000 copies per month)

c) Suppose that David rents four machines and sells 200,000 copies in one month. What is his NOI for that month? (NOI=$1,200)

d) David is considering placing in the student newspaper a $200 ad with a coupon for $0.04 per copy for order of 50 copies or more. He estimates that if he places the ad, he will sell 250,000 copies and that about 50% of his costumers will use the coupon. If he places the ad, what will his break-even point and his NOI be? (200,000 copies per month and NOI=$1,750)