The questions that follow pertain to the economic study and valuation report for the Sample Inn. To answer the questions, open the report and the three Excel programs for the Sample Inn (in photos). Use the document and the Hotel Valuation Software to answer each question. With each answer, include a description of how you performed the necessary calculations and the conclusions you have drawn from the calculation.

Note: Each question is independent of the others. After answering a question, you should reset the spreadsheets to their original settings by closing them without saving changes and then opening them again (or by saving the changes with a different file name and then reopening the original files). Questions In the text of the report (p. 93), the appraiser notes that franchise fees should total of 10%; 6% for the royalty and 4% for the advertising assessment. What happens to the overall cash flow and to the property value if the franchise fees total 8%, 5% for the royalty and 3% for the advertising assessment? What conclusions can you draw from this exercise? Text report - page 93:

o In the rst projection year, we have projected marketing expense for the subject property to be $2,004 per available room, or 5.5% of total revenue. By the 2018/19 stabilized year, these amounts change to $2,109 per available room and 5.6% of total revenue. 0 The subject property is assumed to operate as a Brand Name throughout the projection period. The costs of the Sample Hotel afliation are reected in our forecast and comprise a 6% royalty fee and a 4% advertising assessment [percentage of rooms revenue]. Other charges related to the afliation, such as frequent guest programs, are reected in the appropriate departmental expenses, consistent with the Uniform System of Accounts for the Lodging Industry [USAL[). - Based upon our review of comparable operating statements and the operating history of the subject hotel, we have adjusted the property operations and maintenance line item downward to a more market-appropriate level going forward. In the first projection year, we have projected property operations and maintenance expense for the subject property to be $1,892 per available room, or 5.2% of total revenue. By the 2018/19 stabilized year, these amounts change to $1,991 per available room and 5.3% of total revenue. 0 We have projected utilities expense for the subject property to be 5.4% of total revenue or $1,966 per available room in year one, stabilizing at 5.5% of total revenue or $2,069 per available room. a Management fees for the subject property have been forecast at 3.0% of total revenue. The following tables detail the subject property's assessment history, comparable assessments, applicable tax rates, and our forecast of property tax expense