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Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $520 and has an existing customer base of 510. Paul...
Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $520 and has an existing customer base of 510. Paul plans to raise the annual fee by 5.1% every year and expects the club membership to grow at a constant rate of 3.5% for the next five years. The overall expenses of running the health club are $74,500 a year and are expected to grow at the inflation rate of 2% annually. After five years, Paul plans to buy a luxury boat for $489,000, close the health club, and travel the world in his boat for the rest of his life.What is the annual amount that Paul can spend while on his world tour if he will have no money left in the bank when he dies? Assume Paul has a remaining life of 18 years and earns 8.3% on his savings. Round your answer to 2 decimal places.
Annual FeeCustomersAnnual Fee IncreaseCustomers growth rateDuration (Years)Expenses per yearExpense growth rateLuxury Boat CostProfitsAnnual FeeCustomersRevenueExpensesProfitFVIFFVIF...