Answered You can buy a ready-made answer or pick a professional tutor to order an original one.
A young entrepreneur is planning to open a budget hotel with a start-up capital of RM 300,000. The hotel will have single-bed rooms with an expected rate of RM 80 per room. An average room occupancy r
A young entrepreneur is planning to open a budget hotel with a start-up capital of RM 300,000. The hotel will have single-bed rooms with an expected rate of RM 80 per room. An average room occupancy rate is about 210 per month. Annual operating expenses for which cover administration, utility and maintenance costs are about RM 80,000. The cash flows will be expected to remain unchanged for the next 10 years. The applicable tax rate is 30% and a total of 10,000 in tax-deductible depreciation are allowed every year.
b. Calculate the payback period if the after-tax rate of return of 20 % is expected.
c. If the after tax minimum attractive rate of return of 30 % per year is required, what is the new room rate?
- @
- 2 orders completed
- ANSWER
-
Tutor has posted answer for $10.00. See answer's preview
* ******* Value **** ** **** ****** ** *** ***** ** capital ** RM ******* Now *** ** ********* the Present ***** ** *** **** *************** *** *** **** * **** occupancy *** month * **** *** **** * ** ** Months= *** * 80 * ** * ** 201600Profit ****** *** ***** * ******* * ********* ******** * ************ * Other ******** * ******** ****** ** 201600 - ** ***** * RM ***** * * = ** ************ After *** ***** = *** ** * *** ***** * RM 111600 ** * **** = ** ********* **** *** *** period (CF) * PAT * ************ * ** ***** + ** 10000 * ** 88120We add **** *** ************ since it is *** a **** ******** and there ** no ******* ** **** ******* depreciation ******* us to obtain *** benefit ** ******* taxThe ******** ****** **** **** ***** are expected ** ****** ********* *** *** next 10 ****** ********* *** requirements:b ** *** ***** the ******** rate ** ****** ** *** Hence we **** *** *** ********** ******* ****** ** ********* the ******* ****** ***** *** ** the *********** ************** *************** ****** ** ************* **** **** *************** ******************************************************************************************************************************************************************************************************************************************************************************************* *** ***** ***** ** *** that *** ********** ******* ****** ** * * *** + (|-695605| * ********* **** ****** ** *** minimum ***** *** **** ** return ** *** is ************ the room **** ** ******** * ** **** * ** x ** * ** 2520x *** ********** before *** = ** (2520x - 80000 * 10000) * ** ****** * ************ after *** * (RM ***** * ************ * RM ****** * 63000)Cash Inflows = ******** * ****** * ** 10000 ************** * RM(1764x - ******** now use *** rte ** ****** ** *** as *** ********** factorThe *********** factor for ** years * 30915 **** for **** ****** for ** ***** ie ****************** *** use *** sum ** discounting ******* since *** cash ******* over *** ** year period *** **** ** *** **** year ** **** **** cannot ** **** ** the **** inflows ****** **** on **** ** ***** case the ****** *** each **** ***** **** to be ********** ***** on *** ****************** * ****** x 30915 = 300000We equate the ******* ********** ** our ******** **** ** ****** ** *** outflow ** ** ****** ** this **** ********* the ******* room rate ** ******* ******* *** *************** ******* the equation1764x * ************** ******* = 85057This ***** that *** room **** ****** ** ** ***** per day1 ******* ***** **** ** **** ****** ** *** start ** ******* ie ** ******* *** let ** ********* the ******* ***** ** *** **** *************** for *** **** * **** ********* per ***** * Rate *** **** x ** ** Months= *** x 80 * 12 = RM ************ ****** *** ***** = ******* * ********* ******** * ************ * Other Expenses * ******** ****** ** ****** * ** 80000 - RM 10000 * - * RM 111600Profit ***** *** ***** * *** ** * Tax ***** = ** ****** (1 * **** = ** ********* **** *** the ****** **** = *** * ************ * ** ***** + ** ***** = ** 88120We *** **** the ************ since ** is *** * **** expenses and ***** is ** ******* ** cash ******* ************ ******* ** ** ****** *** ******* ** ******* taxThe ******** states **** **** ***** are ******** ** ****** ********* *** the **** 10 ****** ********* the ************** We *** ***** the expected **** of ****** of *** ***** ** **** *** *** ********** ******* Method ** calculate *** ******* ****** ***** *** ** the discounting factorYearCash FlowDiscounting Factor ** ************* Cash Flow *************** DCF0-3000001-30000000-3000000018812008337343333-2265666728812006946119444-1653722238812005795099537-1143768548812004824249614-718807158812004023541345-364672668812003352951121-6956057881200279245926717636638881200233204939038130529881200194170782555208771088120016214231876944064From the ***** above we *** that *** ********** payback ****** ** * * *** * (|-695605| * ********* **** ****** ** *** ******* ***** *** rate ** return of *** ** required:Let the **** **** ** ******** * ** **** * ** x a) * ** ***** *** ********** ****** Tax * ** ****** - ***** * ****** * ** ****** * ************ ***** *** = *** 2520x * 90000)(1-03) = RM ****** * ********** ******* * ******** * ****** * RM 10000 ************** * ******** * ******** *** *** *** *** ** return of *** ** the ********** factorThe *********** ****** *** ** years * ***** **** *** **** ****** for 10 years ** ****************** *** *** *** *** of *********** ******* since *** **** ******* **** *** 10 **** ****** *** even ie *** same **** ** **** This ****** ** **** in the cash inflows differ **** on **** ** ***** **** the ****** *** **** year would **** ** ** ********** based ** *** ****************** * ****** * 30915 = ******** ****** *** ******* ********** by *** ******** **** ** ****** ** our ******* of ** 300000 ** **** will ********* *** ******* room rate to achieve ******* *** *************** ******* *** ************* * ************** ******* * 85057This ***** that *** **** rate ****** be RM 85057 *** *****