Sunny Beach Resort is a family-friendly budget resort. Management has projected 14,800 room rentals for the year, based on the 60-room resort. The capital invested in the motel is $1,500,000. The target return on investment is 20%. The resort, in an effort to earn the target return on investment, plans to price the rooms at full price plus a markup.

Using data below

1. What price should Sunny Beach charge for a single room rental per night? What is the markup as a percentage of the full cost of a single room rental per night?
2. Market research indicates that if the price of a room-night determined in requirement 1 is reduced by 10%, the expected number of room-nights Sunny Beach could rent would increase by 10%. Should they reduce prices by 10%? Show your calculations.

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Sunny Beach Resort is a family friendly budget resort. Management has projected 14,800 room rentals for the year based on the 60-room resort.

The capital invested in the motel is $1,500,000. The target return on investment is 20%. Sunny Beach plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment.

Variable costs

$ 3.00

per rented room per night

Fixed Costs:
Wages	170,000
Cleaning and repairs	35,000
Administrative costs	190,000