Calculate the projected net income

Assignment Help Finance Basics

Reference no: EM1359918

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%

Q.
1. Determine the projected net income using the above information. Assume the property will be open 365 days a year.
2. Determine the projected net income if the room rate is increased to $55.
3. Independent of #2, determine the projected net income if the room rate is increased to $60 and variable labor is %18.

Reference no: EM1359918

Questions Cloud

Development of any evidence-based program : In your own words, discuss the differences between performance measurement, monitoring and program evaluation. Then explain why each is important to the development of any evidence-based program.

Why do business people keep making the same mistake : Why do business people keep making the same mistake - What happened to Nortel is similar to what happened to WorldCom and Enron in the early 2000s

Calculate the dividend yield and stock price : Suppose you expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of next three years. You believe the stock will sell for $20 at the end of the third year.

Compute bonds yield to call : A newly issued corporate bond has twenty years to maturity. The bond has a coupon rate of 8 percent and pays interest semiannually. Also the bond is callable in six years at a call price equal to 115% of par value.

Calculate the projected net income : Goran Blomberg is interested in investing in a new rooms-only lodging property. He needs some financial projections for the proposed operations.

Level of operating efficiency : How can a government be tempted to take a profit cannot afford? What sounds better, $250,000 of increased services or $187,500 less in expenditures?

Calculate expected rate of return on the stock : Rate of Return. Steady As She Goes, Corporation will pay a year-end dividend of $3 per share. Investors expect the dividend to increase at a rate of 4% indefinitely.

Are mandatory limits on environmentally damaging practices : Are mandatory limits on environmentally damaging practices likely to be more or less successful than voluntary limits?

Policy brief : Assume you are working for the Centers for Medicare and Medicaid Services (CMS) and have been asked to prepare a briefing document for your boss on the Medicaid matching grant. He/she needs to make a briefing to Congress and is not aware of the struc..

User Account

All Pages