User Account

All Pages

Calculate the net present value of the new hotel

Assignment Help Accounting Basics
Reference no: EM132106863

Question - Net Present Value Method-Annuity

Keystone Hotels is considering the construction of a new hotel for $120 million. The expected life of the hotel is 30 years, with no residual value. The hotel is expected to earn revenues of $47 million per year. Total expenses, including depreciation, are expected to be $32 million per year. Keystone management has set a minimum acceptable rate of return of 14%. Assume straight-line depreciation.

a. Determine the equal annual net cash flows from operating the hotel. Round to the nearest million dollars.

b. Calculate the net present value of the new hotel. Use 7.003 for the present value of an annuity of $1 at 14% for 30 periods. Round to the nearest million dollars.

Reference no: EM132106863

Questions Cloud

Analytical review on the financial statements : Identify at least three inherent risks that you would have considered for the company in the audit planning phase and justify your answer
How much direct material did blue fin use during 2016 : Blue Fin Co. produces a product requiring 10 kilograms of material at $1.50 per kilogram. Blue Fin produced 10,000 products during 2016 resulting in a $30,000
Produce in a perfectly competitive setting : How do fixed costs impact the decision of whether to shut down, or continue to produce in a perfectly competitive setting?
What struck you as the most interesting concept in video : What struck you as the most interesting concept in the video and why? Identify what you think your strengths that can be applied to business are?
Calculate the net present value of the new hotel : Calculate the net present value of the new hotel. Use 7.003 for the present value of an annuity of $1 at 14% for 30 periods. Round to nearest million dollars
Produce in a perfectly competitive setting : How do fixed costs impact the decision of whether to shut down, or continue to produce in a perfectly competitive setting?
Potential ethical challenges presented by gaap : What are the inherent or potential ethical challenges presented by GAAP (generally accepted accounting principles).
Create a differentiated classroom framework : Differentiated instruction doesn't start with teaching, it starts with building relationships in a safe, positive classroom environment.
Compute accrual-basis net income : Primo Industries also paid $72,661 for expenses in 2014. Of the amount paid, $30,711 was for expenses, Compute 2014 cash-basis net income

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd