The owner of lazy inn has been requested by first national

Assignment Help Corporate Finance

Reference no: EM13381325

The owner of Lazy Inn has been requested by First National Bank to submit a cash budget for the next calendar year. With that in mind, please prepare the following:

a 12-month projected cash budget statement for 2012 (assume that your beginning cash (Jan 1) is $16,500).

After preparing the above schedule, can you provide the owner with some guidance as to whether:

to raise Lazy Inns summer (June-Aug) rates by 10% across the board. The owners guess is that occupancy would go down by 5 percentage points if the rates were raised. What would the impact on cumulative borrowing be if these rates did change? (use scenario manager)

Cash Inflows
Room

QtyJan-Mar & Dec. Price/Occupancy RateApr-May Price/Occupancy RateJune-Aug Price/Occupancy RateSept.-Nov. Price/Occupancy Rate
1 king size bed/room10$58 / 85%$40 / 50%$58 / 75%$45 / 55%
2 king size beds/room60$70 / 80%$48 / 55%$70 / 80%$50 / 58%
2 bedroom (2 kings/room)20$80 / 78%$60 / 40%$80 / 88%$64 / 60%
10 executive suites 10$120 / 95%$90 / 45%$120 / 100%$95 / 65%
On your cash budget, be sure to show each room types cash flow individually (and total for all rooms by month)

Vending machines:$200/monthly -> Jan-Mar, Sept.- Dec.; $320/monthly (Apr - Aug) Revenue is collected in the month of sale.
Conference Room rental rate = $150 daily (Jan - May, Sept - Dec); $180 daily (June - Aug.) occupancy rate (25% of days in Jan - May, Sept - Dec; 35% of the days in June - Aug) -- Revenue is collected in the month of the rental.
For the room revenue, 30% are cash sales; 70% are credit sales. Of the credit sales, 40% of the credit sales are collected in the month of sale while 25% are collected one month later; the balance two months later. Total room revenue for November and December of 2011 was 115,000 and 185,000, respectively.

Cash Outflows

Mortgage ($12,000/monthly)
Payroll expenses (Jan. - May, Sept - Dec. = $135,000/monthly; June - Aug. = $150,000/monthly )
Insurance (quarterly payments of $9,300 on March 1, June 1, Sept. 1, and Dec. 1)
Utilities (Jan - Mar, Nov. - Dec. = $3,900/month; Apr. - Oct = $2,900/month)
Professional Services ($1,900/month)
Bonus to Desk Manager ($400/monthly if monthly room revenues > $180,000 for Jan - May, Sept. - Dec.; > $195,000 for June - Aug.)
You want to maintain at least $15,000 in your bank account. Any balance less than $15,000 you need to borrow from your line of credit.

What is the highest cumulative amount that needs to be borrowed during this 12 month period? Use the roundup function to round this amount to the highest thousand dollar amount.

Reference no: EM13381325

Questions Cloud

Calculate the firms expected rate of return using the : calculate the firms expected rate of return using the capital asset pricing model. you will first need to calculate

Constant-growth dividend discount model to estimate your : constant-growth dividend discount model to estimate your companys expected rate of return. you will assume that the

Find the monthly closing stock prices in canadian dollars : find the monthly closing stock prices in canadian dollars for your company for the five years ending december 31 of

You will need to choose a company that has been listed on : you will need to choose a company that has been listed on the toronto stock exchange for at least the last 5 years is

The owner of lazy inn has been requested by first national : the owner of lazy inn has been requested by first national bank to submit a cash budget for the next calendar year.

Simpkins corporation is expanding rapidly and it currently : simpkins corporation is expanding rapidly and it currently needs to retain all of its earnings hence it does not pay

Use this analysis to develop an executive summary of the : use this analysis to develop an executive summary of the findings of your group and one recommendation. this summary

1 honey well company is contemplating to liberalize its : 1. honey well company is contemplating to liberalize its collection effort. its present sales are rs. 10 lakh its

This case has been framed in order to test the skills in : this case has been framed in order to test the skills in evaluating a credit request and reaching a correct decision.

User Account

All Pages