Michele Austin knows that cap rates are a good way to estimate the value of a lodging property. She is considering the purchase of three different properties. The financial information she has about them is presented below. Using that information, help Michele calculate the answers needed to make a good purchase.

Property [sLaast vYeoarr S saleas e| Oo ppereantiingn gI nocomme e(N NOIO) D LaSalle Inn The Breakers Lodge The Waterford

. If Michelle paid $3,000,000 for it, what would be the cap rate for the LaSalle Inn, based upon the NOI it achieved last year?
Net Operating Income Investment Amount Cap Rate %
. If Michelle paid $7,000,000 for it, what would be the cap rate for the Breakers Lodge, based upon the NOI it achieved last year?
Net Operating Income OT the co Investment Amount ao If Michelle paid $6,000,000 for it, what would be the cap rate for the Waterford, based upon the NOI it achieved last year?
Net Operating Income : Se as Investment Amount ae cae . If Michele is satisfied with a hotel purchase returning a 10.5% cap rate:
At what price would she value the LaSalle Inn?
Net Operating Income wry Se Investment Amount Cap Rate %
Net Operating Income me el Investment Amount Lael someon Net Operating Income iit sot banupen Investment Amount ide heinghep ae

e. Based upon Michele's acceptable cap rate of 10.5%, which hotel do you think likely represents Michele’s best investment option? Explain the reason for your answer.