You are thinking of opening a Broadway play, I Love You, You’re Mediocre, Now Get Better! It will cost $5 million to develop the show. There are 8 shows per week, and you project the show will run for 100 weeks. It costs $1000 to open the theater each night. Tickets sell for $50.00, and you earn an average of $1.50 profit per ticket holder from concessions. The theater holds 800, and you expect 80% of the seats to be full.
a. Given your other assumptions, how many weeks will the play have to run for you to earn a 100% return on the play’s development cost?
b. Given your other assumptions, how does an increase in the percentage of seats full affect profit?
c. Given your other assumptions, determine how a joint change in the average ticket price and number of weeks the play runs influence profit.
d. Use Excel’s Formula Auditing tools to show which cells in the spreadsheet are directly affected by the percentage of seats full.
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