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.

1. How much sales revenue should the motel genereate to cover all the costs and make the desired return?