Based only on the optimistic estimates, is the new motel economically attractive? Please enter the PW used to reach your decision: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±100. Attempts: 0 of 3 used Save for Later Submit Answer
Based only on the optimistic estimates, is the new motel economically attractive? Please enter the PW used to reach your decision: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±100. Attempts: 0 of 3 used Save for Later Submit Answer
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Based only on the optimistic estimates, is the new motel economically attractive?
Please enter the PW used to reach your decision: $
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±100.
Attempts: 0 of 3 used
Save for Later
Submit Answer
Transcribed Image Text:Current Attempt in Progress
The owners of a discount motel chain are considering building a new motel. Optimistic, pessimistic, and most likely estimates of
several key parameters have been obtained from the local builders and the chamber of commerce. These estimates are shown in the
table below. The life of the motel is estimated to be 15 years, and MARR is 20%.
Parameter
Pessimistic
Most Likely Optimistic
Initial Cost
Annual Operating
Annual Revenue
Click here to access the TVM Factor Table Calculator
$10,600,000 $8,575,000 $5,000,000
$395,000 $200,000 $135.000
$1,000,000 $2,300,000 $3,600,000
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