The Balcones Hotel Company is looking to acquire a $100-$room independent hotel in need of renovation and convert it to a national brand. The hotel can be acquired for $$19$ million and requires another $$2$ 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 $1=$ $$2,200,000,$ Year $2=$ $$2,266,000,$ Year $3=$ $$2,334,000.$ After Year $3,$ Balcones plans on selling the property. Projected market cap rate is $9\%$ and Balcones$$ weighted cost of capital is $11\%.$

Based on the income capitalization approach, would you recommend that Balcones invests in this hotel and why?