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(solution)- The StayaNight discount motel chain is considering a proposal


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The Question

The StayaNight 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.??????????????

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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 calculated 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%.?????????????????

Prepare an income statement and cash flow statement.

 


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Solution #0009250

(solution)- The StayaNight discount motel chain is considering a proposal.zip

The StayaNight discount motel chain is considering a proposal

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The xxxxxxxxxx xxxxxxxx xxxxx chain xx xxxxxxxxxxx x proposal xx xxxxx a xxx xxxxx xxxx would have 150 xxxxxx
xxxxxxxxx Once xxx xxxxx xx operational, xx xxxx xxxxxxxx xxxxxxx xx xxxx xxx xxxxx per xxxx xxxx is occupied. This xxxxx is xxxxxxxx xx xxxx xxxxxxxx xxxx the lifespan of the xxxxxxxx
xxxxxxxxxxx Costs: Daily operational including xxxxxx and xxxxxxxxxx costs xxx $5,000 x $20 per occupied xxxx in xxxx 1, xxx xxxx xxxx xxxxxxxx xx xxxxxxxxx Accounts xxxxxxxxxxx xxxxxxxx xxxxxxx and xxxxxxxxx can xx ignored.
xxxxxxxxxxxxxx Expense: xxxxxxxxxxxxxx expense is estimated at $350,000 annually with no annual change. Annual Replacement xxxxxxx xxxxxxxxxx xxxxx xx xxxxxxx xx xxxx xxx xxx will xxxxxxx xxx year xxxxx xxxxx xxxxxxxxx xx xxxxxxx at xxxxxxx annually.
xxxxxxxxxxx The xxxxx xxxx xxxx $1,000,000 to xxxxxx xxxxxxxx xxxxxxxxxxxx xx be xxxxxxxxxx xx straight line over 30 xxxxxx It xxxx be xxxxxxxx xxxx a 30 year xxxx xx 8% interest xxxxxxxxxx

 

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This paper was answered on 19-Jul-2017

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Jul 19, 2017

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