Winter Sport Inc. operates a Rocky Mountain ski resort The company is planning it in ticket pricing for the coming ski season. Investors would like to cam a 15% return on the company's $100 milion of assets. The company incurs primarily fxed costs to groom the runs and operate the Its Winter Sport projects fixed costs to be $33.750,000 for the ski season. The resort serves 750,000 skers and snowboarders each season Variable costs are $10 per quest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the in ticket prices Assume that Winter Sport's reputation has diminished and other resorts in the vicinity are charging only 565 per it scket Winter Sport has become a price-taker and won't be able to charge more than its compettors At the market price, Winter Sport's managers believe they will stil serve 750,000 skiers and snowboarders each season Read the time 1. Winter Sport can't reduce its costs, what proft will team? State your answer in dollars and as a percent of assets. Will investor be happy with the profit level? Show your analysis Complete the following table to calculate Winter Sport's projected income and excess profit or shortfall, Use parentheses or a minun sign to show a profit shortfat) Revenue at market price Less: Total costs Operating income Compared to the desired operating income of Expected excess profit (profit shortfall) Requirements 1. If Winter Sport can't reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Show your analysis. 2. Assume that Winter Sport has found ways to cut its fixed costs to $30 million. What is its new target variable cost per skier/snowboarder? Assume investors want to earn a 15% return on assets. Compare this to the current variable cost per skier/snowboarder. Comment on your results