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Use the Information Below to Answer the Following Question(s)

Question 42

Multiple Choice

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 the Philadelphia Swim Club earn as a percent of assets?


A) Profit of 3.33%
B) Loss of 3.33%
C) Loss of 58.17%
D) Profit of 36.67%

Correct Answer:

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