Case Study: balance human and natural needs

Tasmania boasts some of the most breathtaking landscapes globally, with the Tasmanian Wilderness

World Heritage Area encompassing nearly $20\%$ of the state's territory. Mary, a devoted advocate for

environmental conservation residing in Tasmania, has made a bold decision to repurpose her farm into a

tourist resort. Nestled in a remote locale near the West Coast, Mary's farm enjoys a stunning setting

overlooking the water and is adjacent to natural bushland teeming with wildlife and biodiversity.

Accessible only via a lengthy gravel driveway, the farm lacks any paved roads.

With an expansive land area of $10$ hectares at her disposal, Mary has chosen to invest in $10$ luxurious

tents complete with shared bathroom facilities and a generously sized communal kitchen. These tents

promise guests a distinctive and immersive experience amidst nature's splendour, allowing them to

reconnect with the environment while indulging in modern comforts.

Converting a farm into a tourist resort is no small endeavour and entails various costs contingent upon

factors such as tent size and construction materials. Mary has diligently consulted with professionals to

assess the financial implications of her project. Based on her consultations, here is a comprehensive

breakdown of the estimated costs Mary might expect to incur:

Tent Procurement: The cost of purchasing luxury tents, including consideration for their size, quality, and

features, typically ranges from $$1,500-$$$3,000$ per tent.

Infrastructure Development: Expenses related to setting up necessary infrastructure such as building

bathrooms, installing plumbing and electrical systems, constructing the communal kitchen, and other

facilities required for guest accommodation. The cost of these can vary significantly, based on the specific

requirements of the project, but typically range from $$20,000$ to $$50,000.$

Site Preparation: Costs associated with preparing the site for the installation of tents and infrastructure,

including clearing land, levelling terrain, and ensuring proper drainage around $25,000-$$$30,000.$

Permitting and Regulatory Compliance: Fees for obtaining permits and licenses required for converting

the farm into a tourist resort, as well as any expenses associated with meeting building codes and safety

regulations. She may need to obtain permits from local authorities, which can cost at least $$1,000.$

Utility Installation: Expenses for connecting the resort to utilities such as water, electricity, and sewage

systems, including installation and hookup fees. $(15,000-25000).$

Furnishings and Amenities: Costs of furnishing the tents and communal areas with furniture, bedding,

and other amenities to ensure guest comfort. This is about $1000-1500$ per tent.

Marketing and Promotion: Budget for marketing and promoting the resort to attract guests, including

website development, advertising campaigns, and promotional materials. This is $500$ a year.

Assessment Task$2$: Individual Assignment BFA$312$: Management Accountability and Accounting

Semester $1\_24$

Operating Expenses: Estimates for ongoing operational costs such as staff wages $(5$ staff days, $8$ hours a

day, $$25/$ hour$),$ maintenance $(500$ a month$),$ utilities $($$$1000$ every three months$),$ and insurance $(1200$ a

year$).$

Professional Fees: Fees paid to consultants, architects, engineers, and other professionals involved in the

planning, design, and implementation of the project $($$$10,000-$$$15,000).$

Tax rate: $???$

She currently has $$35,000$ in her bank account and is open to obtaining a bank loan if necessary.

$8-$ Assuming Mary has expressed her desire to recover the conversion costs within three years, what

is the minimum rent she needs to charge her tenants to accomplish this goal? Is it feasible to

achieve this target in the current, competitive, environment?

$9-$ What is the net present value $($NPV$)$ of the projects?