A nationwide hotel chain is considering locating a new hotel in Bigtown, USA. The cost of building a 150-room hotel (excluding furnishings) is $10,000,000. The firm uses a 15-year planning horizon to evaluate investments of this type. The furnishings for this hotel must be replaced every five years at an estimated cost of $3,250,000 (at time = 0, 5, and 10). The old furnishings have no market value. Annual operating and maintenance expenses for the hotel are estimated to be $400,000. The market value of the hotel after 15 years is estimated to be $3,000,000. Rooms at the hotel are projected to be rented at an average rate of $90 per night. On the average, the hotel will rent 60% of its rooms each night. Assume the hotel will be open 365 days per year. MARR is 15% per year. Graphically show the sensitivity of Present Worth to changes in the following factors: 1. periodic refurnishing cost, 2. annual expenses, and 3. occupancy rate (average percentage of rooms rented each night). On your graph, use percent change as the x-axis and PW as the y-axis. Your graph should include: 1. The PW when none of the factors are changed (y-intercept). 2. The sensitivity with respect to decision reversal should be noted for each factor (the x- intercepts).
A nationwide hotel chain is considering locating a new hotel in Bigtown, USA. The cost of building a 150-room hotel (excluding furnishings) is $10,000,000. The firm uses a 15-year planning horizon to evaluate investments of this type. The furnishings for this hotel must be replaced every five years at an estimated cost of $3,250,000 (at time = 0, 5, and 10). The old furnishings have no market value. Annual operating and maintenance expenses for the hotel are estimated to be $400,000. The market value of the hotel after 15 years is estimated to be $3,000,000. Rooms at the hotel are projected to be rented at an average rate of $90 per night. On the average, the hotel will rent 60% of its rooms each night. Assume the hotel will be open 365 days per year. MARR is 15% per year. Graphically show the sensitivity of Present Worth to changes in the following factors: 1. periodic refurnishing cost, 2. annual expenses, and 3. occupancy rate (average percentage of rooms rented each night). On your graph, use percent change as the x-axis and PW as the y-axis. Your graph should include: 1. The PW when none of the factors are changed (y-intercept). 2. The sensitivity with respect to decision reversal should be noted for each factor (the x- intercepts).
Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
ChapterMA: Math Assessment
Section: Chapter Questions
Problem 1.1MA
Related questions
Question
Please solve, engineering econ
Transcribed Image Text:A nationwide hotel chain is considering locating a new hotel in Bigtown, USA. The cost of building
a 150-room hotel (excluding furnishings) is $10,000,000. The firm uses a 15-year planning horizon
to evaluate investments of this type. The furnishings for this hotel must be replaced every five
years at an estimated cost of $3,250,000 (at time = 0, 5, and 10). The old furnishings have no
market value. Annual operating and maintenance expenses for the hotel are estimated to be
$400,000. The market value of the hotel after 15 years is estimated to be $3,000,000. Rooms at
the hotel are projected to be rented at an average rate of $90 per night. On the average, the hotel
will rent 60% of its rooms each night. Assume the hotel will be open 365 days per year. MARR is
15% per year.
Graphically show the sensitivity of Present Worth to changes in the following factors:
1. periodic refurnishing cost,
2. annual expenses, and
3. occupancy rate (average percentage of rooms rented each night).
On your graph, use percent change as the x-axis and PW as the y-axis. Your graph should include:
1. The PW when none of the factors are changed (y-intercept).
2. The sensitivity with respect to decision reversal should be noted for each factor (the x-
intercepts).
Include your supporting calculations.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 14 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, mechanical-engineering and related others by exploring similar questions and additional content below.Recommended textbooks for you
Elements Of Electromagnetics
Mechanical Engineering
ISBN:
9780190698614
Author:
Sadiku, Matthew N. O.
Publisher:
Oxford University Press
Mechanics of Materials (10th Edition)
Mechanical Engineering
ISBN:
9780134319650
Author:
Russell C. Hibbeler
Publisher:
PEARSON
Thermodynamics: An Engineering Approach
Mechanical Engineering
ISBN:
9781259822674
Author:
Yunus A. Cengel Dr., Michael A. Boles
Publisher:
McGraw-Hill Education
Elements Of Electromagnetics
Mechanical Engineering
ISBN:
9780190698614
Author:
Sadiku, Matthew N. O.
Publisher:
Oxford University Press
Mechanics of Materials (10th Edition)
Mechanical Engineering
ISBN:
9780134319650
Author:
Russell C. Hibbeler
Publisher:
PEARSON
Thermodynamics: An Engineering Approach
Mechanical Engineering
ISBN:
9781259822674
Author:
Yunus A. Cengel Dr., Michael A. Boles
Publisher:
McGraw-Hill Education
Control Systems Engineering
Mechanical Engineering
ISBN:
9781118170519
Author:
Norman S. Nise
Publisher:
WILEY
Mechanics of Materials (MindTap Course List)
Mechanical Engineering
ISBN:
9781337093347
Author:
Barry J. Goodno, James M. Gere
Publisher:
Cengage Learning
Engineering Mechanics: Statics
Mechanical Engineering
ISBN:
9781118807330
Author:
James L. Meriam, L. G. Kraige, J. N. Bolton
Publisher:
WILEY