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Problem 25 nt Summers plans to purchase a proposed 100-rooms hotel fully furnished. The total Bre t is $8.000,000. He believes 70 percent of the
Problem 25 nt Summers plans to purchase a proposed 100-rooms hotel fully furnished. The total Bre t is $8.000,000. He believes 70 percent of the cost can be financed with a loan from he Champaign National Bank at an annual interest rate of 8 percent. The projected paid occupancy is 75 percent. Brent requires a 15 percent return on his investment after the incorporated hotel pays 30 percent of its pretax income as income taxes. The estimated undistributed expenses excluding income taxes and interest expense total $800,000 annually. The estimated direct expenses of the rooms department are $15 for each room sold and 560,000 fixed for the year. Consider a year to have 365 days. Assume annual miscellaneous income of $10,000. Required: Determine the average price per room using the Hubbart Formula. If double rooms are sold at a premium of 20 percent over singles, what are the prices 1. 2. e a 70 percent double occupancy rate
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