Question

The Valley Swim Club has 300 stockholders, each holding one share of stock in the club. A share of club stock allows the shareholder’s family to use the club’s heated outdoor pool during the summer, upon payment of annual membership dues of $175. The club has not issued any new stock in years, and only a few of the existing shares come up for sale each year. The board of directors administers the sale of all stock. When a shareholder wants to sell, he or she turns the stock in to the board, which sells it to the person at the top of the waiting list. For the past few years, the length of the waiting list has remained relatively steady, at approximately 20 names.
The board has developed the following criteria for making a decision on whether to issue new shares:
1. The expected number of days on which attendance would exceed 500 should be no more than 5 with the current membership.
2. The current average daily attendance should be no more than 320.
3. The average daily weekend (Saturday and Sunday) attendance should be no more than 500. (Weekend attendance is every sixth and seventh column entry in each progression of seven entries in the preceding data.)
If these criteria are met, the club will issue one new share, at a price of $1,000, for every two average attendees between the current daily average and an upper limit of 400.
Should the club issue new shares? If so, how many will it issue, and how much additional revenue will it realize?



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  • CreatedJuly 17, 2014
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