Goran Blomberg is interested in investing in a new rooms-only lodging property. He needs some financial projections for the proposed operations. He provides the following:

1. Rooms sales

a. Average room rate$50

b. Average daily occupancy65%

c. Available rooms per day50

2. Fixed labor$12,000/month

3. Other fixed expenses

a. Depreciation$5,000/month

b. Utilities$3,000/month

c. Insurance$1,000/month

d. Other$3,000/month

4. Variable labor15%

5. Other variable expenses

a. Other room expenses5%

b. Administration4%

c. Marketing5%

d. Utilities3%

e. Other8%

6. Income tax rate20%

1. Determine the projected net income using the above information. Assume the property will be open 365 days a year.

2. Determine the projected net income if the room rate is increased to $55.

3. Independent of #2, determine the projected net income if the room rate is increased to $60 and variable labor is 18%.