Green Valley golf course is planning for the coming season. Investors would like to earn a 14% return on the company's $45 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $18,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $8 per golfer. The Green Valley golf course is a price-taker and won't be able to charge more than its competitors who charge $65 per round of golf. What profit will it earn compared to what investors wanted? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level?

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The Answer of Green Valley golf course is planning for the coming season. Investors would like to earn a 14% return on the company's $45 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $18,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $8 per golfer. The Green Valley golf course is a price-taker and won't be able to charge more than its competitors who charge $65 per round of golf. What profit will it earn compared to what investors wanted? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level?

Green Valley Golf Course Is Planning for the Coming Season