Green Pastures golf course is planning for the coming season. Investors would like to earn a 10%
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Question:
Green Pastures golf course is planning for the coming season. Investors would like to earn a 10% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $15,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $20 per golfer.
If the Green Pastures golf course is a price-taker and won't be able to charge more than its competitors who charge $75 per round of golf. What profit will it earn in terms of dollars?
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