Fun Time Inc

question 180

Multiple Choice

Fun Time Inc.uses the same property and equipment to provide skiing services for six months during the winter and mountain roller boarding for six months during the summer.Monthly revenue and cost figures during the summer and winter months for Fun Time are shown below.Fun Time's $1,000 monthly fixed costs will be incurred as long as it remains in business.

Which of the following should Fun Time do if it wants to maximize its annual profit?

• A)operate in both the winter and summer
• B)operate in the summer,but shut down during the winter
• C)operate in the winter,but shut down during the summer
• D)go out of business immediately

---

Definitions:

Expected Return

The weighted average of all possible returns, considering the probabilities of each outcome.

Growth Rate

The rate at which a company's earnings or revenues increase in a given time period, reflecting its ability to expand its business.

Annual Dividend

The total dividend that a company pays to its shareholders in a single fiscal year.

Zero Growth Stock

Zero growth stock is a type of stock for which the dividends are expected to remain the same, with no expected growth in payouts over time.