Use the Information Below to Answer the Following Question(s)

question 207

Multiple Choice

Use the information below to answer the following question(s) :
Green Pastures golf course is planning for the coming season. Investors would like to earn a 10% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $15,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $20 per golfer.
-If the Green Pastures golf course is a price-taker and won't be able to charge more than its competitors who charge $75 per round of golf. What profit will it earn as a percent of assets?

• A) Loss of 17.50%
• B) Profit of 17.50%
• C) Profit of 57.50%
• D) Loss of 57.50%

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Definitions:

Interval Measure

A statistical metric used to express the amount of variance or uncertainty between data points in a series.

Receivable Turnover

A financial ratio that measures how efficiently a company uses its assets by calculating how many times a company can turn its accounts receivable into cash during a period.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, calculated as (Cash + Marketable Securities + Receivables) / Current Liabilities.

Increased

This term denotes a situation or quantity that has become larger or greater in size, amount, number, or degree.