Southeast U's campus book store sells course packs for $15.00 each, the variable cost per pack is $12.00, fixed costs for this operation are $300,000, and annual sales are 110,000 packs. The unit variable cost consists of a $3.00 royalty payment, V_R , per pack to professors plus other variable costs of V_O = $9.00. The royalty payment is negotiable. The book store's directors believe that the store should earn a profit margin of 10% on sales, and they want the store's managers to pay a royalty rate that will produce that profit margin. What royalty per pack would permit the store to earn a 10% profit margin on course packs, other things held constant? Do not round your intermediate calculations.

Select one:

a. $1.77

b. $1.74

c. $1.72

d. $1.83

e. $2.22