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Hotel 3313 has 100 rooms and expects 60% occupancy next year. The owner wants a net income of $2,000,000 for the next year (Tax rate
Hotel 3313 has 100 rooms and expects 60% occupancy next year. The owner wants a net income of $2,000,000 for the next year (Tax rate is 30%). The hotel has following fixed cost items: . Interest expense: $80,000 Depreciation: $400,000 Property taxe $50,000 a) Compute the average room rate required (5 pts). b) Compute the single and double rates, when double occupancy is 70% and the owner wants a $10 difference between single and double rates (5 pts). c) If the owner wants to see if she can price rooms based on square footage. For 40 single rooms, each has 100 sq ft, and for 60 double rooms, each has 150 sq ft. Calculate the single and double rates respectively, based on square footage (hint: calculate the price per square foot first!) (8 pts)
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