= Homework: Chapter 7 Homework Question 2, E7-16 (similar to) Part 1 of 5 HW Score: 0%, 0 of 4 points O Points: 0 of 1 Save John Brown is the managing partner of a business that has just finished building a 60-room motel. Brown anticipates that he will rent these rooms for 20,000 nights next year (or 20,000 room-nights). All rooms are similar and will rent for the same price. Brown estimates the following operating costs for next year: (Click to view the operating costs.) The capital invested in the motel is $1,200,000. The partnership's target return on investment is 20%. Brown expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. Requirements 1. 2. What price should Brown charge for a room-night? What is the markup as a percentage of the full cost of a room-night? Brown's market research indicates that if the price of a room-night determined in Requirement 1 is reduced by 15%, the expected number of room-nights Brown could rent would increase by 10%. Should Brown reduce prices by 15%? Show your calculations. Requirement 1. What price should Brown charge for a room-night? What is the markup as a percentage of the full cost of a room-night? Begin by selecting the formula, then enter the amounts and solve for the room price per night. (Enter amounts in the formula to the nearest cent. Round the price per room-night to the nearest cent.) + + Price per room-night = per room-night Data table Variable operating costs Fixed costs S 3 per room-night Salaries and wages S Maintenance of building and pool 185,000 35,000 120,000 Other operating and administration costs $ 340,000 Total fixed costs