Philadelphia Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $ 38 comma 000 comma 000$38,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $ 12 comma 900 comma 000$12,900,000 for the year. About 550 comma 000550,000 members are expected to swim each year. Variable costs are about $ 14$14 per swimmer. Philadelphia Swim Club is a priceminus−taker and won't be able to charge more than its competitors who charge $ 38$38 for a membership. What profit will it earn as a percent of assets?
Philadelphia Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $ 38 comma 000 comma 000$38,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $ 12 comma 900 comma 000$12,900,000 for the year. About 550 comma 000550,000 members are expected to swim each year. Variable costs are about $ 14$14 per swimmer. Philadelphia Swim Club is a priceminus−taker and won't be able to charge more than its competitors who charge $ 38$38 for a membership. What profit will it earn as a percent of assets?
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 12PROB
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Question
Philadelphia Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's
$ 38 comma 000 comma 000$38,000,000
of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be
$ 12 comma 900 comma 000$12,900,000
for the year. About
550 comma 000550,000
members are expected to swim each year. Variable costs are about
$ 14$14
per swimmer. Philadelphia Swim Club is a
priceminus−taker
and won't be able to charge more than its competitors who charge
$ 38$38
for a membership. What profit will it earn as a percent of assets?
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