Home / Questions / Help A nationwide mochain is considering lowing a new motel in Bigtown
Help A nationwide mochain is considering lowing a new motel in Bigtown, USA The cost of building a 170om motel excluding tumings) is $5.5 million. The firm uses a 15-year planning horison to evaluate investments of this type. The mihings for this mom be replaced five years at animated cost of $1.900.000 0.5 and 101 Thedumihings have no market value Annulering and maintenance expenses for the facility an estimated to be $115.000. The market value of the motele 15 years is estimated to be 25% of the original building cost. Rooms at the motele projected to be rented at an average rate of $60 per night. On the average the model wil rent 65% of its rooms each night. Assume the model will be open 365 days per year MARR is 12% per year Using an annual worth measure of the pied economically active? b. Investigate sensitivity to decision reversal for the following three factors: (1) capital investment (2) MARR, and (3) occupancy rate (average percent of rooms rented per night). To which of these factors is the decision most sensitive? Assume that the market value remains constant at the amount used in parta c. Graphically investigate the sensitivity of the AW to changes in the above three factors. Investigate changes over the interval 30%. On your graph use percent change as the axis and AW as they Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. a. Calculate the AW value for the project. AW(129) S housand (Round to one decimal place.) b. Investigate sensitivity to decision reversal (Round to one decimal place) Factor Sensitivity with respect to Decision Reversal Capital investment MARR Occupancy rate The decision is most sensitive to changes in c. Plot the AW of each alternative against the changes in the above three factors Use the line drawing tool to plot the lines that represent the AW value for each factor Use the range from - 30% to 30% change for your plot Be sure to properly label your lines 1000000 2000001
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