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VIP$-$MD is a health maintenance organization $($HMO$)$ located in North Carolina. Unlike the traditional fee$-$for$-$service model that determines the payment according to the actual services used or costs incurred, VIP$-$MD receives a fixed, prepaid amount from subscribers. The per member, per month rate $($PMPM$)$ is determined by estimating the health care cost per enrollee within a geographic location. The average health care coverage in North Carolina costs $$372$ per month, which is the same amount irrespective of the subscriber$$s age. Because individuals are demanding quality care at reasonable rates, VIP$-$MD must contain its costs to remain competitive. A major competitor, National Physicians, entered the North Carolina market early in the current year with a monthly premium of $$329.$ VIP$-$MD wants to maintain its current market penetration and hopes to increase its enrollees in the current year. The latest data on the number of enrollees and the associated costs follow:

Age Enrollment in Current Year Projected Enrollment Next Year Average Monthly Cost in Current Year

$1$ to $446,08849,377$ $ $11,148,272$

$5$ to $1482,85685,06310,060,032$

$15$ to $1996,27396,2878,437,224$

$20$ to $2466,64668,2829,539,824$

$25$ to $34133,896132,95426,432,608$

$35$ to $44167,276175,84638,882,508$

$45$ to $5485,89691,28922,742,336$

$55$ to $6499,824102,32328,692,112$

$65$ to $74156,688161,95949,518,544$

$75$ to $8468,29572,86533,433,160$

$85$ years and older $23,89927,24924,286,875$

$1,027,6371,063,494$ $ $263,173,495$

Required:

$1.$ Calculate the target cost required for VIP$-$MD to maintain its current market share and profit per enrollee in the current year.

$2.$ Costs in the health care industry applicable to VIP$-$MD and National Physicians are expected to increase by $6\%$ in the coming year. VIP$-$MD is planning for the year ahead and is expecting all providers, including VIP$-$MD and National Physicians, to increase their rates by $$25$ to $$354.$ Calculate the new target cost assuming again that VIP$-$MD wants to maintain the same profit per enrollee as in the current year.

$($For all requirements, do not round intermediate calculations and round your answers to $2$ decimal places.$)$