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Business, 22.04.2021 17:50 luis1581

A nationwide motel chain is considering locating a new motel in​ Bigtown, USA. The cost of building a 130​-room motel​ (excluding furnishings) is ​$5.2 million. The firm uses a 12​-year planning horizon to evaluate investments of this type. The furnishings for this motel must be replaced every four years at an estimated cost of ​$1,875,000 ​(at k=​0, 4​, and 8​). The old furnishings have no market value. Annual operating and maintenance expenses for the facility are estimated to be ​$130,000. The market value of the motel after 12 years is estimated to be 20​% of the original building cost. Rooms at the motel are projected to be rented at an average rate of ​$45 per night. On the​ average, the motel will rent 60​% of its rooms each night. Assume the motel will be open 365 days per year. MARR is 9​% per year. a. Using an​ annual-worth measure of​ merit, is the project economically​ attractive?

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A nationwide motel chain is considering locating a new motel in​ Bigtown, USA. The cost of building...
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