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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 700. Paul plans to raise the annual fee by 6.2 percent every year and expects the club membership to grow at a constant rate of 2.3 percent for the next five years. The overall expenses of running the health club are $73,400 a year and are expected to grow at the inflation rate of 2.4 percent annually. After five years, Paul plans to buy a luxury boat for $481,000, close the health club, and travel the world in his boat for the rest of his life
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