Compute the anticipated room rate using the Rule-of Thumb, or Building Cost rate. (Note: More information may...

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Compute the anticipated room rate using the Rule-of Thumb, orBuilding Cost rate.
(Note: More information may be GIVEN than is needed.)
GIVEN: Number of rooms 800
Average Occupancy Percentage firsttwo years 60%
Cost of erecting the building $64,500,000
Cost of acquiring the land $ 8,000,000
Legal costs to incorporate $        500,000
Upfront costs to lease furnitureand TV’s $       100,000
Landscaping costs $ 1,250,000
Cost of tearing down the oldstructure $       750,000

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4.3 Ratings (714 Votes)

Please see the below table It has been assumed that hotelmotel wants to cover the Capital cost in 3 years Expected Payback period and all calculations are based on this assumption Sr Particular Unit A Number of Rooms 800 Number B Average Occupancy See Answer

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GIVEN:	Number of rooms	800
	Average Occupancy Percentage firsttwo years	60%
	Cost of erecting the building	$64,500,000
	Cost of acquiring the land	$ 8,000,000
	Legal costs to incorporate	$ 500,000
	Upfront costs to lease furnitureand TV’s	$ 100,000
	Landscaping costs	$ 1,250,000
	Cost of tearing down the oldstructure	$ 750,000