This is a 4 part question.

The Alahuzos Lodge, a proposed 150-room hotel with a fully equipped restaurant, will cost $5,900,000 to construct. An estimated additional $100,000 will be invested in the business as working capital. Of the total investment, $4,500,000 is to be secured from the Fleet Bank at a rate of 10% interest and the remainder will be equity provided by the owners. The projected occupancy rate is 68% for the year. The owners desire a 15% return on equity after the corporation pays income taxes of 25%. The estimated depreciation expenses for the first year of operation are $100,000. The estimated undistributed expenses, not including income taxes and interest expense, are $805,400. The estimated direct expenses of the rooms department are $20 for each room sold. Consider a year to have 365 days.

What is the required net income?

a. $225,000

b. $300,000

c. $675,000

d. $900,000

What are the estimated annual interest costs?

a. $10,000

b. $150,000

c. $450,000

d. $600,000

What is the estimated EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization)?

a. $475,000

b. $675,000

c. $850,000

d. $1,600,000

What is the average price of a room using the Hubbart Formula, assuming the contribution from the restaurant department is $0? (Round up to the nearest quarter).

a. $43.75

b. $62.25

c. $64.50

d. None of the above.