Mountaintop Golf Course Is Planning for the Coming Season

Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $47,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $22,000,000 for the golfing season. About 420,000 golfers are expected each year. Variable costs are about $17 per golfer. The Mountaintop golf course is a price-taker and won't be able to charge more than its competitors who charge $79 per round of golf. What profit will it earn in terms of dollars?

A) $18,320,000
B) $(4,040,000)
C) $4,040,000
D) $(22,000,000)

Correct Answer:

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