You are considering developing an 18-hole championship golf course that requires an investment of $25,000,000. This investment cost includes the course development, club house, and golf carts. Once constructed, you expect the maintenance cost for the golf course to be $660,000 in the first year, $705,000 in the second year and continue to increase by $45,000 in subsequent years. The net revenue generated from selling food and beverage will be about 15% of greens fees paid by the players. The cart fee per player is $14, and 42,000 rounds of golf are expected per year. You will own and operate the course complex for 7 years and expect to sell it for $31,000,000. What is the greens fee per round that will provide a return on investment of 15% ? Assume that the greens fee will be increased at an annual rate of 6%. Click the icon to view the interest factors for discrete compounding when /= 6% per year. Click the icon to view the interest factors for discrete compounding when /= 15% per year. The greens fee that will provide a return on investment of 15% is $ per round. (Round to the nearest cent.)

You are considering developing an 18-hole championship golf course that requires an investment of $25,000,000. This investment cost includes the course development, club house, and golf carts. Once constructed, you expect the maintenance cost for the golf course to be $660,000 in the first year, $705,000 in the second year and continue to increase by $45,000 in subsequent years. The net revenue generated from selling food and beverage will be about 15% of greens fees paid by the players. The cart fee per player is $14, and 42,000 rounds of golf are expected per year. You will own and operate the course complex for 7 years and expect to sell it for $31,000,000. What is the greens fee per round that will provide a return on investment of 15% ? Assume that the greens fee will be increased at an annual rate of 6%. Click the icon to view the interest factors for discrete compounding when /= 6% per year. Click the icon to view the interest factors for discrete compounding when /= 15% per year. The greens fee that will provide a return on investment of 15% is $ per round. (Round to the nearest cent.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 3E

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