Constructing a Downtown Parking Lot in Draper

The town of Draper, with a population of 20,000, sits adjacent to
State University, which has an enrollment of 27,000 students. Downtown
Draper merchants have long complained about the lack of parking
available to their customers. This is one primary reason for the steady
migration of downtown businesses to a mall several miles outside town.
The local chamber of commerce has finally convinced the town council to
consider the construction of a new multilevel indoor parking facility
downtown. Kelly Mattingly, the town’s public works director, has
developed plans for a facility that would cost $4.5 million to
construct. To pay for the project, the town would sell municipal bonds
with a duration of 30 years at 8% interest. Kelly also estimates that
five employees would be required to operate the lot on a daily basis, at
a total annual cost of $140,000. It is estimated that each car that
enters the lot would park for an average of 2.5 hours and pay an average
fee of $3.20. Further, it is estimated that each car that parks in the
lot would(on average) cost the town $0.60 in annual maintenance for
cleaning and repairs to the facility. Most of the downtown businesses
(which include a number of restaurants) are open 7 days per week.

A. Using break-even analysis, determine the number of cars that would
have to park in the lot on an annual basis to pay off the project in
the 30-year time frame.

B. From the results in (A), determine the approximate number of cars
that would have to park in the lot on a daily basis. Does this seem to
be a reasonable number to achieve, given the size of the town and
college population?