Hilltop Golf Course is planning for the coming season.Investors would like to earn a 10% return on the company's $60,000,000 of assets.The company primarily incurs fixed costs to groom the greens and fairways.Fixed costs are projected to be $32,000,000 for the golfing season.About 600,000 rounds of golf are expected to be played each year.Variable costs are about $16 per round of golf.Hilltop Golf Course is a price-taker and will not be able to charge more than its competitors,who charge $78 per round of golf.What profit will it earn in terms of dollars?

Question

Quizplus · Accepted Answer

To calculate the profit, we need to first calculate the revenue and the total cost.

Revenue: 
600,000 rounds of golf x $78 per round = $46,800,000

Total cost: 
Fixed cost = $32,000,000 
Variable cost = 600,000 rounds of golf x $16 per round = $9,600,000 
Total cost = $32,000,000 + $9,600,000 = $41,600,000

Profit: 
Revenue - Total cost = $46,800,000 - $41,600,000 = $5,200,000

Therefore, the correct answer is B.

Hilltop Golf Course Is Planning for the Coming Season