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A nationwide hotel chain is considering locating a new hotel in Bigtown, USA. The cost of building a 150-room hotel (excluding furnishings) is $10,000,000. The

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A nationwide hotel chain is considering locating a new hotel in Bigtown, USA. The cost of building a 150-room hotel (excluding furnishings) is $10,000,000. The firm uses a 15-year planning horizon to evaluate investments of this type. The furnishings for this hotel must be replaced every five years at an estimated cost of $3,250,000 (at time - 0,5, and 10). The old furnishings have no market value. Annual operating and maintenance expenses for the hotel are estimated to be $400,000. The market value of the hotel after 15 years is estimated to be $3,000,000. Rooms at the hotel are projected to be rented at an average rate of $90 per night. On the average, the hotel will rent 60% of its rooms each night. Assume the hotel will be open 365 days per year. MARR is 15% per year. Graphically show the sensitivity of the equivalent worth (PW or AW) to changes in the following factors: 1. periodic refurnishing cost, 2. annual expenses, and 3. occupancy rate (average percentage of rooms rented each night) Investigate changes over the interval +/- 20%. On your graph, use percent change as the x-axis and equivalent worth (PW or AW) as the y-axis. Your graph should include the following information: 1. Equivalent worth at 0% change of all factors. 2. The sensitivity with respect to decision reversal should be noted for each factor (the calculated percent change to breakeven)

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