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The Balcones Hotel Company is looking to acquire a 1 0 0 - room independent hotel in need of renovation and convert it to a
The Balcones Hotel Company is looking to acquire a room independent hotel in need of renovation and convert it to a national brand. The hotel can be acquired for $ million and requires another $ million in renovation and conversion costs. Currently the hotel is breaking even, but Balcones believes it will do well as a national brand. Estimated cash flows are: Year $ Year $ Year $ After Year Balcones plans on selling the property. Projected market cap rate is and Balcones weighted cost of capital is Based on the income capitalization approach, would you recommend that Balcones invests in this hotel and why?
The Balcones Hotel Company is looking to acquire a room independent hotel in need of renovation and convert it to a national brand. The hotel can be acquired for $ million and requires another $ million in renovation and conversion costs. Currently the hotel is breaking even, but Balcones believes it will do well as a national brand. Estimated cash flows are: Year $ Year $ Year $ After Year Balcones plans on selling the property. Projected market cap rate is and Balcones weighted cost of capital is
Based on the income capitalization approach, would you recommend that Balcones invests in this hotel and why?
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