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 has a favourable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should Green Valley charge for a round of golf?

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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 has a favourable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should Green Valley charge for a round of golf?

Green Valley Golf Course Is Planning for the Coming Season