Home Insert Draw Formulas Data Review View File Read Only- You can\'t save chang

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Home Insert Draw Formulas Data Review View File Read Only- You can't save changes to this file 1 Chapter 8, Bonus Question 8 Jerry's new hotel Hotel construction costs Number of rooms Mortgage payments Non-operating expenses Occupancy Per room expense @ 60% occupan Undistributed operating expense F&B; operating income All other non-rooms operating income Target investment return Tax rate $8,000,000 200 $750,000 $250,000 60% $45.00 1,000,000 $125,000 $50,000 12% 40% cy 10 12 13 14 15 16 17 18 19 20 21 Step 1. Calculate the hotel's target before-tax net income. Owner's investment ROI After-Tax Net Income After-Tax Net Income 23 24 Before-Tax Net Income Q 1 Q 3 Bonus Question 8

Explanation / Answer

Step 1: Calculation of Hotel's target before tax net income

Step 2: Caculation of non operating expenses

Step 3: Caculation of undistributed operating expenses

Step 4: Caculation of operated department income excluding rooms

Step 5: Caculation of operated income for rooms

Step 6: Caculation of estimated room department revenue based of estimated occupancy

Step 7 : Caculation of hotel's required ADR

Owner's net income 8,000,000 ROI 15% After tax net income 1,200,000 After tax net income 1,200,000 Tax 40% Before tax net income 2,000,000

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