Toby Is Arranging for a Rock Concert to Be Held

question 7

Multiple Choice

Toby is arranging for a rock concert to be held in the students union. The use of the hall will be free but security costs of £100 will have to be met. The cost of the main band will be £2,500 and the supporting band will cost £150. Tickets will be priced at £11 each. If Toby sells 500 tickets as he anticipates, what profit will this event make?

• A) £2,750
• B) £5,500
• C) £2,850
• D) £2,900

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Definitions:

Net Cash Inflows

The total amount of cash received minus the total amount of cash spent over a specific period of time.

Investment Project

A project involving the allocation of capital resources with the expectation of generating future returns or benefits.

Discount Factor

A multiplier for future cash flows to convert them into present value, reflecting the time value of money.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, indicating how much revenue is contributing to fixed costs and profit.