Mount Snow operates a mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 16% return on the companys $109 375 000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $35 000 000 for the ski season. The resort serves about 700 000 skiers and snowboarders each season. Variable costs are about $12 per guest. Currently, the resort has such a favourable reputation among skiers and snowboarders that it has some control over the lift ticket prices.

Required

1. (4 marks) Would Mount Snow emphasise target pricing or cost-plus pricing. Why?
2. (3 marks) If other resorts in the area charge $83 per day, what price should Mount Snow charge?