Randy is a manager of a business that has completed building a $50-$room hotel. Randy believes that the rooms will be rented for $12,500$ nights next year $(12,500$ room nights$).$ All rooms should be rented for the same price. Randy estimates the following operating expenses for next year.

Variable operating costs $$4$ per room night.

Fixed Costs

Salaries

$$200,000$

Maintenance

$$40,000$

Other Operating Costs

$$135,000$

Total Fixed Costs $$375,000$

The capital invested in the hotel is $$2,000,000.$ The company$$s target return on investment is $15\%.$ Randy expects the demand for rooms to be uniform during the year. He plans to price the room rental at full cost plus a markup on full cost to earn the target return on investment.

Requirement $1$: What price should be charged for a room night?