Assignment:
Goran Blomberg is interested in investing in a new rooms-only lodging property. He needs some financial projections for the proposed operations. He provides the following:
1. Room sales
Average room rate $50
Average daily occupancy 65%
Average rooms per day 50
2. Fixed labor- $12000/month
3. Other fixed expenses
Depreciation $5000/month
utilities $3000/month
Insurance $1000/month
Other $3000/month
4. Variable labor- 15%
5. Other variable expenses
Other room expenses 5%
Administration 4%
Marketing 5%
Utilities 3%
Other 8%
6. Income tax rate- 20%
Required to answer:
Question 1. Determine the projected net income using the above information. Assume the property will be open 365 days a year.
Question 2. Determine the projected net income if the room rate is increased to $55.
Question 3. Independent of #2, determine the projected net income if the room rate is increased to $60 and variable labor is %18.