Mount Snows operates a Rocky Mountain ski resort. The company is planning its in-ticket pricing for the coming ski season. Investors would like to earn a 17% return on the company's $100 milion of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Mount Snows projects fixed costs to be $32.000.000 for the ski season. The resort serves about 775,000 skiers and snowboarders each season Variable costs are about 10 per guest. Currently, the resort had such a favourable reputation among skiers and snowboarders that it had some control over the lift-ticket prices Assume that Mount Snows' reputation has diminished and other resorts in the vicinity are charging only $64 per lift ticket. Mount Snows has become a price-taker and won't be able to charge more than its competitors. At the market price, Mount Snows managers believe they will stil serve 775,000 skiers and snowboarders each season. Requirements Requirements 1. If Mount Snows can't reduce its costs, what profit will it eam? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Show your analysis 2. Assume that Mount Snows has found ways to cut its fixed costs to $29 million. What is its new target variable cost per skierisnowboarder? Compare this to the current variable cost per skier snowboarder. Comment on your results Print Done X this target since it is the current variable Time Remaining: 01:02:49 Next O 1. If Mount Snows can't reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Show your analysis Complete the following table to calculate Mount Snows' projected income and excess profit or shortfall. (Use parentheses or a minus sign to show a profit shortfall.) Revenue at market price 32000000 7750000 0 Less: Total costs Operating income O O Compared to the desired operating income of Expected excess profit (profit shortfall) As a percentage of assets, Mount Snows's projected profit is % (Round the percentage to two decimal places, X.XX%) Wil investors be happy with this profit level? Share prices As a percentage of assets, Mount Snows's projected profit is %. (Round the percentage to two decimal places, X.XX%) Will investors be happy with this profit level? Share prices 2. Assume that Mount Snows has found ways to cut its fixed costs to $29 million. What is its new target variable cost per skier/snowboarder? Compare this to the current variablem per skier/snowboarder. Comment on your resuits. Complete the following table to calculate Mount Snows' new target variable cost per customer. (Round your final answer to the nearest cent.) Less: Less Taroet total variable costs Time Remaining: 01:0 ame per skier/snowboarder. Comment on your results. Complete the following table to calculate Mount Snows' new target variable cost per customer. (Round your final answer to the nearest cent.) Less Less Target total variable costs Divided by: Target variable cost per skier/snowboarder This target variable cost is cost the current variable cost of 10. Mount Snows this target since it is the current variable