Lou's investment ($) $7,890,000 Lou's desired ROI (Net income) 20% Lou's marginal tax rate 30% Funds borrowed $11,835,000 Interest rate 12%

Forecasted annual costs: Depreciation, property taxes and insurance $3,156,000 Management fees 5% of room sales Rooms department expenses 25% of room sales Undistributed operating expenses $1,262,400

Assume the Bruno has 150 guestrooms, and it expects to have an occupancy rate of 70%. Also, assume a 365-day year in your calculations.

What should be the ADR so that the motel can make the sales revenue found in question 1?

Bruno's has both single and double rooms. Assume that 80 percent of rooms sold are double rooms, and they sell at $20 more than the price of a single room. What is the average selling price of a double?