Use the information below to answer the following question(s) :
Philadelphia Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $30 million of assets. The company primarily incurs fixed costs to maintain the swimming pool. Fixed costs are projected to be $12,500,000 for the year. About 500,000 members are expected to swim each year. Variable costs are about $10 per swimmer.
-If the Philadelphia Swim Club is a price-taker and won't be able to charge more than its competitors who charge $37.00 for a membership. What profit will it earn in terms of dollars?
A) $11,000,000
B) $(12,500,000)
C) $1,000,000
D) $(1,000,000)
Correct Answer:
Verified
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