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This table contains all the information. The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of

This table contains all the information.image text in transcribedimage text in transcribedimage text in transcribed

The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of three motels under scrutiny are provided below. Parameters Apex Tops Perfect 1. Initial Cost ($) $500,000 550,000 585,000 $350,000 at EOY1 $360,000 at $400,000 2. Revenues ($) decreasing by 1% EOY1 increasing annually by 2% annually annually thereafter thereafter $275,000 at $232,000 at $210,000 at EOY1 EOY1 increasing EOY1 3. Operating increasing by by $4,000 Costs $5,000 annually decreasing by annually 1.5% annually ($) thereafter. thereafter thereafter 4. End-of-life salvage value $120,000 95,000 -30,000 ($) 5. Useful life 5 years 5 years (years) All parameter values are fictitious. EOY = End-of-year Industry Standard = 4 years MARR = 10% 10 years . . 10% FINANCIAL TABLE DISCRETE CASH FLOW AND COMPOUNDING n (F/P,i%,n) 1.1000 (P/F,i%,n) 0.9091 0.8264 (A/P,i%,n) 1.1000 (P/A,i%,n) 0.9091 (A/F,i%,n) 1.0000 1 (FIA,i%,n) 1.0000 2.1000 (A/G,i%,n) 0.0000 0.4762 0.9366 2 1.2100 0.5762 1.7355 0.4762 3 1.3310 0.7513 0.4021 2.4869 0.3021 3.3100 4 1.4641 0.6830 0.3155 3.1699 0.2155 4.6410 5 1.6105 0.6209 0.2638 3.7908 0.1638 6.1051 6 1.7716 0.5645 0.2296 4.3553 0.1296 7.7156 1.3812 1.8101 2.2236 2.6216 3.0045 7 1.9487 0.5132 0.2054 4.8684 0.1054 9.4872 8 2.1436 0.4665 0.1874 5.3349 0.0874 11.4359 9 2.3579 0.4241 0.1736 5.7590 0.0736 13.5795 3.3724 10 0.3855 6.1446 15.9374 3.7255 2.5937 2.8531 0.1627 0.1540 0.0627 0.0540 11 0.3505 6.4951 18.5312 4.0641 12 3.1384 0.3186 0.1468 6.8137 0.0468 21.3843 13 3.4523 0.2897 0.1408 7.1034 0.0408 24.5227 14 3.7975 0.2633 0.1357 7.3667 0.0357 27.9750 4.3884 4.6988 4.9955 5.2789 5.5493 15 0.2394 0.1315 7.6061 0.0315 31.7725 4.1772 4.5950 16 0.2176 0.1278 7.8237 0.0278 35.9497 21. Perfect's Internal Rate of Return (IRR). 22. The incremental Internal Rate of Return (AIRR) between the Apex and Perfect motels. 23. Top's External Rate of Return (ERR). 24. Perfect's External Rate of Return (ERR). The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of three motels under scrutiny are provided below. Parameters Apex Tops Perfect 1. Initial Cost ($) $500,000 550,000 585,000 $350,000 at EOY1 $360,000 at $400,000 2. Revenues ($) decreasing by 1% EOY1 increasing annually by 2% annually annually thereafter thereafter $275,000 at $232,000 at $210,000 at EOY1 EOY1 increasing EOY1 3. Operating increasing by by $4,000 Costs $5,000 annually decreasing by annually 1.5% annually ($) thereafter. thereafter thereafter 4. End-of-life salvage value $120,000 95,000 -30,000 ($) 5. Useful life 5 years 5 years (years) All parameter values are fictitious. EOY = End-of-year Industry Standard = 4 years MARR = 10% 10 years . . 10% FINANCIAL TABLE DISCRETE CASH FLOW AND COMPOUNDING n (F/P,i%,n) 1.1000 (P/F,i%,n) 0.9091 0.8264 (A/P,i%,n) 1.1000 (P/A,i%,n) 0.9091 (A/F,i%,n) 1.0000 1 (FIA,i%,n) 1.0000 2.1000 (A/G,i%,n) 0.0000 0.4762 0.9366 2 1.2100 0.5762 1.7355 0.4762 3 1.3310 0.7513 0.4021 2.4869 0.3021 3.3100 4 1.4641 0.6830 0.3155 3.1699 0.2155 4.6410 5 1.6105 0.6209 0.2638 3.7908 0.1638 6.1051 6 1.7716 0.5645 0.2296 4.3553 0.1296 7.7156 1.3812 1.8101 2.2236 2.6216 3.0045 7 1.9487 0.5132 0.2054 4.8684 0.1054 9.4872 8 2.1436 0.4665 0.1874 5.3349 0.0874 11.4359 9 2.3579 0.4241 0.1736 5.7590 0.0736 13.5795 3.3724 10 0.3855 6.1446 15.9374 3.7255 2.5937 2.8531 0.1627 0.1540 0.0627 0.0540 11 0.3505 6.4951 18.5312 4.0641 12 3.1384 0.3186 0.1468 6.8137 0.0468 21.3843 13 3.4523 0.2897 0.1408 7.1034 0.0408 24.5227 14 3.7975 0.2633 0.1357 7.3667 0.0357 27.9750 4.3884 4.6988 4.9955 5.2789 5.5493 15 0.2394 0.1315 7.6061 0.0315 31.7725 4.1772 4.5950 16 0.2176 0.1278 7.8237 0.0278 35.9497 21. Perfect's Internal Rate of Return (IRR). 22. The incremental Internal Rate of Return (AIRR) between the Apex and Perfect motels. 23. Top's External Rate of Return (ERR). 24. Perfect's External Rate of Return (ERR)

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