$ 234, 150 TIME VALUE OF MONEY APPLICATIONS buted expenses istrative and general $ 55,230 $ 275, 040 285 $ 180,810 $ 56,640 $ 293,250 $ 103,530 $ 185,520 $ 57, 885 $ 304.750 hise fee $ 106,080 $ 189, 720 $ 123,480 $ 60, 155 vins $ 134,400 $ 108,630 $ 310.500 $ 197 ,160 $ 61,290 his and maintenance $ 697,200 $ 757, 680 $ 138, 210 $ 1 12,890 $ 200.890 ndistributed expenses $ 792,030 $ 981, 796 $ 787, 695 $ 139.655 $ 1 15,020 S? $ 1,080,558 $ 814, 610 $ 142.560 perating profit $ 63,000 $ 72,000 $ 830,250 $ 1, 133,135 $ 1,160,054 charges $ 83, 580 $ 85,680 $ 76, 500 acement fee $ 87, 720 $ 79,500 $ 83,580 $ 85,680 $ 87, 720 $ 91,160 $ 81,000 estate taxes $ 63,000 $ 72,000 $ 92,880 $ 293, 160 $ 315, 360 $ 76, 500 $ 91,160 $ 79,500 $ 92,880 ame for replacement $ 328,440 $ 81,000 anded $ 498,870 $ 666, 436 $ 752 , 118 $ 341, 320 $ 791,815 $ 347,760 rty, is red $ 812,294 ash to stable for debt from . How much money has Tennyson Investments borrowed for this project based on a 70% loan-to-Value eague ratio? 2 What is the maximum amount available for debt service in the first year if the lender requires a 1.25 irant, poms. debt service coverage ratio? Utilizing the debt service payment calculated in the previous question, calculate the ideal amortization nyson rate for the first mortgage at the 6.4% annual interest rate. non- 4. Tennyson Investments has hired Geoff Strips Management Co. to operate the hotel. The Strips Co. 335 has negotiated a 10% equity kicker on the sale of the property if the hotel meets or exceeds projected cash flows. If the property is sold in Year 5, what dollar amount would Geoff Strips Management receive? Utilize the capitalization rate method of valuation based on a 10% cap rate. 5. Calculate the NPV for this project based on a 12% cost of capital. What is the IRR? 1,280 3,910 5,830 ,980 ,000the rela 284 CHAPTER 9 . HOSPITALITY INDUSTRY APPLICATIONS OF TIME VALUE 2. Undistribute Administ 3. What is the loan-to-value ratio for this project? What would the investor's ROI be for this 5-year project if the restaurant achieved its budgeted on. chis erating results for the year? Franc Marketi 4. If the investor has a hurdle rate of 15%, does this project meet or exceed the investor's requirements? Energy Repairs Total un Concept Check Gross op The Tennyson Borrowing Power Fixed ch Man Tennyson Investments, a hotel investment company, has identified a potential midscale branded Rea hotel prospect located in a major metropolitan area. The Mason Hotel, a franchised property, is on the market, and the owners are looking to sell the asset quickly because they need cash to invest in other projects they currently own and operate. The Mason Hotel is located next to a midscale limited-service hotel, across the street from a historic conference center and an upscale full-service hotel and adjacent to a new major-league baseball stadium. The property consists of a 124-room full-service hotel with a leased restaurant, a forty-space parking garage in the basement, a gift shop, an exercise room, and meeting rooms. The property is currently being marketed at an asking price of $6.4 million. Tennyson Investments offered $5 million, which was accepted by the sellers, and has secured a new non- recourse first mortgage with a 6.4% interest rate for 70% of the total project cost of $5,977,335. Tennyson has estimated the following cash flows for the first five years of the project. Mason Hotel Five-year Pro Forma Year 1 2 3 4 Revenues 5 Rooms $ 1,886,850 $ 2,216,640 $ 2, 362, 320 Telephone $ 2, 454, 960 $ 7,980 $ 2,501,280 $ 8, 160 $ 8,415 $ 8, 745 Restaurant lease $ 8,910 $ 104, 160 $ 106,800 $ 109,395 $ 113,685 $ 115,830 Other income $ 101,010 $ 68, 400 $ 69, 870 $ 72,610 $ 73, 980 Gross income $ 2, 100,000 $ 2,400,000 $ 2,550,000 $ 2,650,000 $ 2,700,00 Departmental expenses Rooms $ 547,941 $ 594,946 $ 613,022 $ 629, 452 $ 634,07 Telephone $ 32,696 $ 34, 083 $ 35, 830 $ 37, 959 $ 39,4 Restaurant utilities $ 30, 133 $ 31,495 $ 32,895 $ 34,844 $ 36, Other $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ Total departmental expenses $ 610,770 $ 660, 524 $ 681, 747 $ 702,255 $ 709 Gross operating income $ 1,489,230 $ 1, 739 , 476 $ 1,868,253 $ 1, 947, 745 $ 1,99