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Calculate the average required room rate using the above information. If the differential between single and double rooms is $12 per night and 35% of the rooms sold are doubles, calculate the single and double room rates.

Calculate the average required room rate using the above information. If the differential between single and double rooms is $12 per night and 35% of the rooms sold are doubles, calculate the single and double room rates.

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Nanaimo Inn has 60 rooms and expects occupancy to be 70%. The owner wants to earn 10% return on total assets after tax. Total assets: $2,400,000 Income tax rate: 25% Depreciation: straight line (20 years) on assets of $1,600,000 (no salvage) $300,000 Other fixed expenses: Direct costs: $100,000 $200,000 10% on balance owing of $900,000 Annual principal payment Indirect costs Mortgage interest: Mortgage principal: required: $45,000 Room service has an operating loss of $50,000 Calculate the average required room rate using the above information. If the differential between single and double rooms is $12 per night and 35% of the rooms sold are doubles, calculate the single and double room rates.
Transcribed Image Text:Nanaimo Inn has 60 rooms and expects occupancy to be 70%. The owner wants to earn 10% return on total assets after tax. Total assets: $2,400,000 Income tax rate: 25% Depreciation: straight line (20 years) on assets of $1,600,000 (no salvage) $300,000 Other fixed expenses: Direct costs: $100,000 $200,000 10% on balance owing of $900,000 Annual principal payment Indirect costs Mortgage interest: Mortgage principal: required: $45,000 Room service has an operating loss of $50,000 Calculate the average required room rate using the above information. If the differential between single and double rooms is $12 per night and 35% of the rooms sold are doubles, calculate the single and double room rates.
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