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

question 157

Multiple Choice

Use the information below to answer the following question(s) :
Rosemont Tennis is planning for the coming year. Investors would like to earn a 12% return on the company's $25 million of assets. The company primarily incurs fixed costs to maintain the tennis courts. Fixed costs are projected to be $12,500,000 for the year. About 500,000 court time hours are expected to be played each year. Variable costs are about $5 per hour of court time.
-If Rosemont Tennis is a price-taker and won't be able to charge more than its competitors who charge $32.50 per hour of court time. What profit will it earn as a percent of assets?

• A) Profit of 25%
• B) Loss of 5%
• C) Loss of 25%
• D) Profit of 5%

---

Definitions:

Legal Position

indicates an individual's or entity's standing or status in relation to the law, including rights, obligations, or liabilities.

Partnership

A business structure in which two or more individuals manage and operate a business in accordance with terms and objectives set out in a Partnership Agreement.

Corporation

A legal entity separate from its owners, with its rights and liabilities, that is formed to conduct business or other activities.

Limited Liability

A legal principle that limits an investor's or owner's financial loss in a business venture to the amount of capital they have invested.