The pictures above represent Your hotel is $100$ rooms, with a yearly occupancy

rate of $90\%$ and an average daily rate of $$400.$ Your room revenue makes up $95\%$ of your gross revenue and your operating expenses are $40\%$ of gross income. There is a major drought in New Orleans, and, as such, your water costs are now $10\%$ of your operating expenses. Your expenses are increasing at $3\mathrm{.}5\%$ a

year and your gross revenue is increasing at $2\mathrm{.}5\%$ a year. Your room occupancy is $1\mathrm{.}5$ people per room and their total per capita water consumption averages $50$ gallons of water per day. If you fix your shower heads, bids from contractors suggest that it will cost you $$1,000$ per room and take a year to complete.

Unfortunately, your construction manager estimates that it will cost $$4,000$ additional dollars per room because of a construction defect originating from when the building was built $40$ years ago. However, if you make this investment, it will cut your water costs in half. If you decide to make the fix, you would take out a loan at $9\%$ to finance the project. Your intent is to pay off the principal of the loan solely with the savings each year from your water line item. This would be the first time that you have taken out a mortgage on the property. Calculate the NPV$,$ IRR, ROI, ROC and Payback period for your green investment.

You hire an appraiser because you are worried that this investment may not add any additional value over the next ten years. Your appraiser says that the cap rate with the fix is $7\%$ and without the fix it is $9\%.$Calculate the NPV of the cash flow $($not including the value of the land or your tax basis$)$ over ten years

with and without the green fix$$and with and without a sale$$based on Before Tax Cash Flow $($BTCF$).$

Is this fix a good investment? Please show your work in an excel spreadsheet.