This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began.1. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.

The Las Vegas Burburr made headlines when it undertook a \($150\) million renovation. The hotel closed its Blue Tower, which was last updated in 2001, and started a major renovation of the 500 rooms housed in that tower. On January 1, 2021, the newly renovated Blue Tower reopened. In addition to renovating the existing rooms and suites in the Blue Tower, 50 guest rooms were added to the tower. Assume that the annual fixed operating costs for the Blue Tower will be \($2,390,000\) and that the variable cost per hotel room night after the renovation is \($27\). Also assume that maintenance costs in the seventh year, after the renovation, will be \($17,000,000\); maintenance costs, twelve years after the renovation, are estimated at \($25,000,000\). The towers in the Las Vegas Burburr are generally renovated once every fifteen years. Assume the renovated tower’s room rate is \($149\) per night, and 91.2% occupancy is expected on average.

Requirements:
1. In number of years, what is the payback period of the renovation? Ignore the maintenance costs in the seventh and twelfth years for the purpose of the payback calculation.
2. What is the net present value (NPV) of this investment? Assume an interest rate of 10%.
3. What qualitative factors did Burburr’s management likely consider when making the decision to renovate the hotel?