Scenario 15-11 Vincent Operates a Scenic Tour Business in Boston. He Has

question 173

Short Answer

Scenario 15-11
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent's cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent's demand is:
Assume that Vincent's customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
-Refer to Scenario 15-11. One of Vincent's friends tells him he would be more profitable if he charged a single price of $12. Assuming no changes in consumer demand, what would Vincent's profit be if he charged every customer $12?

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Definitions:

Loan Indentures

Formal agreements specifying the terms of a bond or loan, including the interest rate, repayment schedule, and other conditions.

Covenants

Clauses in a contract or loan agreement that stipulate certain actions that must be taken or avoided by the borrower.

Dividend Payments

Periodic payments made by a company to its shareholders out of its profits or reserves.

Dividend Payout Ratio

A financial metric that shows the percentage of earnings a company distributes to shareholders in the form of dividends.