A 25-room budget motel expects its occupancy next year to be 80%. The owners investment is $402,800. They want an after tax return on their investment of 15%. Tax rate is 25%.

-interest on a long term mortage is 10%. Present balance outstanding is $806,400.

- Depreciation rate on the building is 10% of the present book value of $700,200. Depreciation on the furnishings and equipment is at 20% of the consolidated present book value of $150,400.

-other known fixed costs total $141,800 a year.

-at 80% occupancy rate the models operating expenses, wages, supplies and laundry, etc are calculated to be $55,400 a year.

- the motel has other income from vending machines of $5,210 a year.

1. To cover all costs and produce the required net income after tax, what should the motels average room rate be next year?