Watson Hotels Corp. The director of operations of Watson Hotels Corp. has recommended that new rooms will be added to the hotel capacity in San Francisco, CA. The Watson Hotel in San Francisco is a business type of hotel and attracts the business travelers from all over the world. The demand for the hotel has been increasing due to its facilities such as conference rooms, banquet facilities, and office type of rooms. The director thinks that the Watson Hotel establishment in San Francisco will be more profitable once they expand their capacity. A careful study of the market and an analysis of costs show that the expansion should yield the following results each year Projected Income Statement of the Expansion Net Sales Less Cost of Goods Sold Less Operating Expenses = Income Before Interest & Tax Income Tax Net Income include depreciation expense of $300,000 4,000,000 2,200,000 300,000 1,500,000 600,000 900,000 Financial data for the last year, considered to be a typical year, are given as follows Balance Sheet Income Statement Net Sales Less Cost of Goods Sold Less Operating Expenses* = Income Before Interest & Tax Less Interest Expense = Income Before Tax 14,000,000 8,500,000 2,000,000 3,500,000 250,000 3,250,000 Total Assets 15,000,000 Current Liabilities Long Term Debt Stockholders' Equity Total Liabilities & SE 4,500,000 2,500,000 8,000,000 15,000,000 Income Tax Net Income include depreciation expense of $600,000 1,300,000 1,950,000 The investment for the expansion and sale of the new rooms has been estimated at $5,000,000 "The expansion project will yield a 20.00 percent return on assets," The director of the Operation states Watson Hotels Corp. The director of operations of Watson Hotels Corp. has recommended that new rooms will be added to the hotel capacity in San Francisco, CA. The Watson Hotel in San Francisco is a business type of hotel and attracts the business travelers from all over the world. The demand for the hotel has been increasing due to its facilities such as conference rooms, banquet facilities, and office type of rooms. The director thinks that the Watson Hotel establishment in San Francisco will be more profitable once they expand their capacity. A careful study of the market and an analysis of costs show that the expansion should yield the following results each year Projected Income Statement of the Expansion Net Sales Less Cost of Goods Sold Less Operating Expenses = Income Before Interest & Tax Income Tax Net Income include depreciation expense of $300,000 4,000,000 2,200,000 300,000 1,500,000 600,000 900,000 Financial data for the last year, considered to be a typical year, are given as follows Balance Sheet Income Statement Net Sales Less Cost of Goods Sold Less Operating Expenses* = Income Before Interest & Tax Less Interest Expense = Income Before Tax 14,000,000 8,500,000 2,000,000 3,500,000 250,000 3,250,000 Total Assets 15,000,000 Current Liabilities Long Term Debt Stockholders' Equity Total Liabilities & SE 4,500,000 2,500,000 8,000,000 15,000,000 Income Tax Net Income include depreciation expense of $600,000 1,300,000 1,950,000 The investment for the expansion and sale of the new rooms has been estimated at $5,000,000 "The expansion project will yield a 20.00 percent return on assets," The director of the Operation states