Please do 3 420ED3. The recently opened Grand Hyatt Wailea Resort and Spa on Maui cost $600 million, about$800,000 per room, to build. Daily operating expenses average $135 a room if occupied and$80 a room if unoccupied (much of the labor cost of running a hotel is fixed). At an averageroom rate of $500 a night, a marginal tax rate of 40%, and a cost of capital of 11%, whatyear-round occupancy rate do the Japanese investors who financed the Grand Hyatt Wailearequire to break even in economic terms on their investment over its estimated 40-year life?What is the likelihood that this investment will have a positive NPV? Assume that the $450million expense of building the hotel can be written off straight line over a 30-year period(the other $150 million is for the land which is not depreciable) and that the present value ofthe hotel's terminal value will be $200 million.4. Conduct a sensitivity analysis for a project with the following characteristics. Each parame-ter can take on any of three different values but once a parameter value is selected, thatvalue remains constant for the 10-year period. The discount rate is 10% and the project lifeis 10 years. Ignore taxes and depreciation.$4000R(1) Sales (units)(2) Price (per unit)(3) Variable cost (per unit)(4) Fixed cost(5) Initial investmentF%55. American Fruit Co. is considering constructing a new plant to process frozen fruit juices.One plant would be capital intensive, the other much more labor intensive. Although thefinal decision would hinge on the relative cost of capital versus labor in the northern1:TG<6|LowMacBook AirY160$3,0003,000100,0001,000,000H&1U200,0002,000,000*Mean8500$3,7503,000J➤111High960$4.0003.000400,0004,000,0009KF9O)0F10| P

Number of rooms in the hotel = Total Cost / Cost per room…

3. The recently opened Grand Hyatt Wailea Resort and Spa on Maui cost $600 million, about $800,000 per room, to build. Daily operating expenses average $135 a room if occupied and $80 a room if unoccupied (much of the labor cost of running a hotel is fixed). At an average room rate of $500 a night, a marginal tax rate of 40%, and a cost of capital of 11%, what year-round occupancy rate do the Japanese investors who financed the Grand Hyatt Wailea require to break even in economic terms on their investment over its estimated 40-year life? What is the likelihood that this investment will have a positive NPV? Assume that the $450 million expense of building the hotel can be written off straight line over a 30-year period (the other $150 million is for the land which is not depreciable) and that the present value of the hotel's terminal value will be $200 million.

3. The recently opened Grand Hyatt Wailea Resort and Spa on Maui cost $600 million, about $800,000 per room, to build. Daily operating expenses average $135 a room if occupied and $80 a room if unoccupied (much of the labor cost of running a hotel is fixed). At an average room rate of $500 a night, a marginal tax rate of 40%, and a cost of capital of 11%, what year-round occupancy rate do the Japanese investors who financed the Grand Hyatt Wailea require to break even in economic terms on their investment over its estimated 40-year life? What is the likelihood that this investment will have a positive NPV? Assume that the $450 million expense of building the hotel can be written off straight line over a 30-year period (the other $150 million is for the land which is not depreciable) and that the present value of the hotel's terminal value will be $200 million.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...

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