Rocky Pines golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $49,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 450,000 golfers are expected each year. Variable costs are about $16 per golfer. Rocky Pines golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should the course charge for a round of golf? (Round the final answer to the nearest cent.)
Rocky Pines golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $49,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 450,000 golfers are expected each year. Variable costs are about $16 per golfer. Rocky Pines golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should the course charge for a round of golf? (Round the final answer to the nearest cent.)
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 1nM
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![Rocky Pines golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $49,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs
are projected to be $25,000,000 for the golfing season. About 450,000 golfers are expected each year. Variable costs are about $16 per golfer. Rocky Pines golf course has a favorable reputation in the area and therefore, has some
control over the price of a round of golf. Using a cost - plus approach, what price should the course charge for a round of golf? (Round the final answer to the nearest cent.)
OA. $84.62
B. $16.00
O C. $71.56
OD. $121.96
1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3b42998-d5ec-46d7-99c0-a0ebc444a5a3%2Fbd6ed640-136d-4354-a96b-dd3585bba67d%2Ftvhknk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Rocky Pines golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $49,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs
are projected to be $25,000,000 for the golfing season. About 450,000 golfers are expected each year. Variable costs are about $16 per golfer. Rocky Pines golf course has a favorable reputation in the area and therefore, has some
control over the price of a round of golf. Using a cost - plus approach, what price should the course charge for a round of golf? (Round the final answer to the nearest cent.)
OA. $84.62
B. $16.00
O C. $71.56
OD. $121.96
1
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