What is the estimated hotel value today

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A hotel is projected to have $ 44 mi in total revenues during the following year. Total expenses are projected to be $ 29 mi. 3% of the total revenue is allocated as capital reserves. In the next four year, the annual growth rates in total revenues and total expenses will be {2%, 3%, 4%, 3%} and {4%, 7%, 4%, 3%} respectively. In the following years, revenues and total expenses will stabilize at a constant rate of 2.5%. Discount rate on such investments is estimated at 9%. Going out cap rate is 7.5%. Cost of sales is usually 3%. Your investment horizon is 5 years. What is the estimated hotel value today?

Reference no: EM132404574

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