2)

	Year 1	Year 2
Gross Room Rate	$245.00
Direct Costs (35% of GRR)	$85.75
Net Room Rate	$159.25
Expenses-(Fixed)	$60.00
Net Profit	$99.25
Profit Margin	40.51%

1. Determine the Profit Margin if the Gross Room Rate increases by 15% in year 2.
2. In dollar and percentage terms, how much did Net Profit increase in year 2?
3. In relative term (% increase), how much did profit margin increase in year 2?
4. What would the Gross Room Rate need to be if a Profit Margin of 50% is required?
5. What is the relationship between the change in Gross Room Rate and the change in Profit Margin?