Doug Dezotell desires to purchase a hotel franchise from Friendly Inns. The costs associated with the franchise are as follows:

Initial fee: $150 per room with a minimum of $12,500 Monthly royalty: 3% of gross sales Advertising fees: 2% of gross sales Reservation fees: $2.00 for each confirmed reservation Dezotell’s Friendly Inn would be a rooms-only lodging property of 100 rooms. The average daily rate is forecasted to be $55, and the daily occupancy per- centage for the year is expected to be 70%. Twenty percent of the total rooms are expected to come through the franchisor’s reservation system.
Required:
Calculate the estimated first-year franchising costs to Dezotell’s proposed Friendly Inn. Include the initial fee as part of the first year’s costs.