WinterDream operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 20% return on the company's $110 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. WinterDream projects fixed costs to be $38,200,000 for the ski season. The resort serves about 875,000 skiers and snowboarders each season. Variable costs are $9 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the lift ticket prices.
Assume that WinterDream's reputation has diminished and other resorts in the vicinity are charging only $58 per lift ticket. WinterDream has become a price-taker and won't be able to charge more than its competitors. At the market price, WinterDream's managers believe they will still serve 875,000 skiers and snowboarders each season
If WinterDream can't reduce its costs, what profit will it earn?