1. Carol has been a swimming instructor for the local Park-and-Rec for over 20 years. She has a loyal following of students, and therefore, is investigating opening her own pool. Her idea is to open a small, indoor pool and provide weekly swimming lessons during the day and offer recreational swimming for members in the evenings. Carol and her husband live in Des Moines, Iowa, a city with a population of over 300,000. Carol’s husband is employed full-time and provides medical insurance for the family. Their children are grown and live away from home. 
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3. Carol has found a lot in a residential area zoned for commercial use, and a contractor who will construct the pool, building, and parking lot for a total cost of $750,000. Carol estimates the following revenues/costs of opening her new facility: $750,000 Cost of constructing the building, a small pool, and a parking lot. The estimated useful life of the facility is 20 years. $300/year Members will pay an annual fee for the use of the pool. Carol estimates that she can attract and accommodate 200 members annually. $40/class For a basic 4-week swimming class. Carol anticipates 50 students per month. 
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5. Classes will meet every week of the year. $25,000/year Lifeguard salary. A lifeguard is required by law to be on duty whenever the pool is open. $10,000/year Part-time swimming instructor salary. $5,000/month Utilities. One of the major operating expenses for a pool is utilities to heat and filter the water and power for the immediate areas. $5,000/year for General maintenance and repairs. 
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9. Carol has come to you for advice. 
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11. A. Based on the above information, would you recommend Carol open this pool? Why or why not? Provide commentary as well as computations to support your response. 
12. B. What are some of the questions you would ask Carol to help her think through this decision? List at least five relevant questions.

Answer rating: 100% (QA)

A Based on the above information I would recommend that Carol open this pool The construction costs ... View the full answer