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Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $550 and has an existing customer base
Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $550 and has an existing customer base of 620. Paul plans to raise the annual fee by 6.7 percent every year and expects the club membership to grow at a constant rate of 2.8 percent for the next five years. The overall expenses of running the health club are $74,300 a year and are expected to grow at the inflation rate of 1.2 percent annually. After five years, Paul plans to buy a luxury boat for $493,000, close the health club, and travel the world in his boat for the rest of his life
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