Solution
Step 1: Find the new price
Price = Average cost + (Required net income + loss of fee scheduled payers / Volume of charge payers) / 1- Average discount on charged payers
Average cost = $100
Required net income = $5000
Loss of fee scheduled payers = 950
Volume of charge payers = 210 (100 +110)
Average discount on charged payers = 53.33% = 0.5333332
Step 2:
By substituting on the above formula
Price = 100 + (5000 + 950) / 210 / 1-0.5333332
= 100 + (5950 /210) / 0.4667
= 100 +28.33 /0.4667
= 128.33 / 0.4667
= 274.97
= $ 275
Step 3:
Therefore the new price is $275. Hence the option C. 275 is correct.
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