Newspaper news about Lewis' boxing match - Tyson stated that both boxers would receive $2.5 million in cash each. The fight will be broadcast on closed-circuit television. The central promoter will collect 100% of the proceeds from the ticket sale and will return 30% to the local promoter. He hopes to be able to sell 1,100,000 TV seats, with a net average price of $10 per seat. The center's promoters will also receive $250,000 from Madison Square Garden (which has sold an overall 19,500 seats) ranging from $150 near the ring to the cheapest $20, with a gross reception total of $1,250,000. Receipts of $250,000 from Madison Square will not be distributed to Local Promoters.

Asked:

a. The promoter of the center strives to be able to ascertain, how much it will use for advertising promotions. What is the maximum that can be spent and still return principal for the entire project, assuming that it will sell 1.1 million tickets?

b. If the central promoter wants an operating profit of $500,000, how many seats should be sold? It is assumed that the average ticket price is $10 and the fixed cost is $8 million.