Peter & Petra’s Place is a proposed 45-room motel with a fully equipped restaurant that will cost them €1,750,000 to build. The projected occupancy rate is 75% for the year. Peter and Petra desire a 14% after-tax net profit.

The tax rate is 30%. The estimated overhead expenses, not including income taxes, are €650,000. The estimated direct expenses of the rooms department are €8.50 for each room sold and they expect a double occupancy rate of 45%.

Based on this information, a determine the ADR using the Hubbart formula and assume the restaurant produced nothing b determine the single and double rates if there is a €16 price difference between the single and double rooms c determine to what extent the ADR can be lowered and still meet Peter and Petra’s financial expectations if the restaurant makes a departmental profit of €45,000 each year