Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

The Staya Night discount motel chain is considering a proposal to build a new motel that would have 150 rooms.

• Revenues: Once the motel is operational, it will generate revenue of $100 per night per room that is occupied. This price is expected to hold constant over the lifespan of the project.

• Operational Costs: Daily operational including labour and materials; costs are $5,000 + $20 per occupied room in year 1, and both will increase 3% annually. Accounts Receivable, Accounts Payable and Inventory can be ignored.

• Administrative Expense: Administrative expense is estimated at $350,000 annually with no annual change. Annual Replacement Expense (furniture etc.) is $50,000 in year one and will grow10% per year after that. Marketing is planned at $60,000 annually.

• Investment: The motel will cost $1,000,000 to build. Simplify depreciation to be find outd as straight line over 30 years. It will be financed with a 30 year loan at 8% interest compounded annually with annual payments. It will be sold at the end of year 15 for $300,000, at which time the remaining balance on the load will be paid. The land lease cost is $100,000 annually. The corporate minimally attractive rate of return is 15%. Tax rate is 35%.

1. Prepare an income statement and cash flow statement.

2. Devise three alternative scenarios concerning the motel project. Make one variable an average occupancy rate percentage. You are free to choose more 2 variables. Make and state any assumptions, if needed. Specify your evaluation criteria.

3. Submit your analysis as a management proposal including any recommendations suggested by the scenario analyses.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939122

Have any Question? 


Related Questions in Basic Finance

Bethesda mining company reports the following balance sheet

Bethesda Mining Company reports the following balance sheet information for 2015 and 2016. BETHESDA MINING COMPANY Balance Sheets as of December 31, 2015 and 2016 2015 2016 2015 2016 Assets Liabilities and Owners' Equity ...

1 do you think renovation is more or less risky than a new

1. Do you think renovation is more or less risky than a new investment? 2. What is meant by the incremental cost of refinancing? 3. In general, what kinds of tax incentives are available for rehabilitation of real estate ...

Level a basic a1-a17 - a1 bond valuation a 1000 face value

LEVEL A BASIC A1-A17 - A1. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years A1. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. Th ...

1 what is multiple regression and how is it used in

1. What is multiple regression, and how is it used in behavioral science research? 2. What is a spurious relationship? 3. What is the difference between a common-causal variable, an extraneous variable, and a mediating v ...

Get rich quick a funds management company is considering an

Get Rich Quick, a funds management company, is considering an investment in a new pharmaceutical company. The company will be unable to pay a dividend until the end of Year 6. If a new product is successfully developed f ...

Assume the time from acceptance to maturity on a 2000000

Assume the time from acceptance to maturity on a $2000,000 banker's acceptance is 90 days. Further assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 90 dya b/a's is 7%. D ...

1 what are the major issues related to global tampd2 how

1. What are the major issues related to global T&D? 2. How can the effectiveness of global virtual teams be improved? 3. How can global leadership be developed? 4. How does one acquire a global mind-set? 5. What is the r ...

The ceo of a large corporation holds a position of 25

The CEO of a large corporation holds a position of 25 million shares in her company's stock, which is currently priced at $20 and pays no dividends. She is concerned that, because of her large shareholdings and the fact ...

Beta electronics is considering the purchase of testing

Beta Electronics is considering the purchase of testing equipment that will cost $633,000 to replace old equipment. Assume the new equipment will generate before-tax savings of $281,000 over the four years. The new equip ...

The scientific method can be described as a circle or a

The scientific method can be described as a circle or a spiral of steps that leads from an initial observation, to a hypothesis, to new observations, to a new hypothesis. For each of the following observations: a. State ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen