Alliston spa, a California company, has been expanding in the Northeast. It has opened a spa in Stowe, Vermont, and another in the Berkshires, Massachusetts, and is now planning to open a third one in the East End’s South Fork of Long Island, New York. Alliston is eyeing an unused space owned by Orange Shores Inn. The space is located on the third floor of the main building. About 1/5 of the 10,000 sq. ft. space will be used to build a wide pathway with a garden trellis along the path to connect the main building to a new addition under construction. The rest of the space can be rented out to a third party.  

Alliston spa has offered to lease the unused property with Orange Shores Inn for 4 years for a monthly rent of $22,000 for the first 2 years, and a 7% annual increase for the next two years

Orange spa has the following two options :.  

Alliston spa.   The Orange hotel has to make the space ready for lease. It has to set up the partitions and put in all the necessary plumbing and new flooring. The estimates for the up-front renovation costs range from $200,000 to $250,000 to be depreciated over the life of the project using straight-line with a zero salvage value. Any other spa-related installations will be assumed by Alliston. The existing elevators and toilets would be used by Alliston and, therefore, a pro-rata allocation of the costs of the facilities should be based on the area that will be used. It is estimated to be $11,000 per annum. In addition, there will be an allocation of $ 2,000 per annum to Alliston for any repair and maintenance costs that will be incurred. Alliston will pay all utilities and other operating expenses.   

             Orange Spa. If the hotel creates its own spa, the up-front investment is estimated to range between $200,000 to $230,000. Other capital investments will include the installations of whirlpools, sauna, and massage and facial rooms. These additional investments will amount to $150,000.    

Revenues are expected to be generated 30% from hotel guests and the other 70% from outside bookings. Total sales are estimated to be $845,000 the first year of operation. This revenue has been arrived based on expected hotel bookings per year and prediction of demand for spa services from Long Island and the surrounding area. There will also be a spill-over effect from outside spa guests patronizing its own restaurant, adding additional covers per day. It is estimated that this will generate additional revenues of $55,000 per annum.  

             The project is estimated to last for 6 years. Sales are expected to grow at 4% per year. Estimates of the operating costs are as follows:

             Salaries                                                                            15% of Sales

             Other operating expenses                                              30% of Sales

             Depreciation- equipment & furniture                          Straight-line; zero salve value

             Capital expenditure                                                        Equal annual depreciation

             Cost of Capital.    Orange Shores Inn has a capital structure consisting of 40% debt and 60% equity. The debt consists of loans from the Long Island Bank with an interest rate of 6.8%. The cost of equity of the hotel shareholders is 16%. The corporate tax rate is 40%.  

It is possible that the hotel will project a different image to the public if it offers spa services. Instead of a hotel that caters to families, it will be perceived more as a hotel that caters to couples and singles. This might have a negative impact in terms of attracting tourists traveling with children. The total patronage for the hotel might decline by 12%. Below is the projection on net room revenue for the next six years.

Projection of Net Room Revenue

(Room Sales – Room Operating Expenses)

1. What are the relevant cash flows associated with each project?
2. How should the different lives of the projects be accounted?
3. What criteria should be used to evaluate the projects?
4. Which project is recommended

In c++, please make it short and simple

A hotel chain needs a program which will produce statistics for the hotels it owns.

Write a program which displays the occupancy rate and other statistics for any of the chain’s large hotels (all are 20 floors with 16 rooms each floor).

In main:

-declare a 20 X 16 array of “int” named hotel to represent a hotel’s 20 floors and 16 rooms per floor.

Then in main, repeatedly:

-call a function which fills the hotel array with 1s and 0s, where 1 indicates an occupied room and 0 indicates an unoccupied room. Call a second function to validate that each entry is either 1 or 0 by having the second function access the original entry using a pointer in its parameter list.

-pass the hotel array to a third function which dynamically allocates a new size 20 “int” array with each element representing a floor of the hotel and the floor’s number of occupied rooms; place the number of occupied rooms of each floor into the new array and return it to main.

-display the floor number** and number of occupied rooms on each floor by incrementing the address of the new array.

-also calculate and display the hotel’s overall occupancy rate to 1 decimal (total rooms occupied per total rooms), and the floor number** and number of occupied rooms of the floor with the highest occupancy.

-process another hotel (unknown number of hotels in chain).

**NOTE: hotels do not have a floor numbered 13 due to guests’ superstitions.

To create your screen print, temporarily set the floors and rooms to 3 and 5 respectively to reduce data entry, and enter:

Floor #1: occupied, occupied, unoccupied, occupied, unoccupied

Floor #2: occupied, unoccupied, occupied, occupied, occupied

Floor #3: occupied, unoccupied, unoccupied, unoccupied, occupied

1. The table below shows part of the cost structure (total fixed cost, total variable cost, and total cost) for a typical producer of olive oil -- a perfectly competitive industry.

1. Copy the table into Excel and use it to calculate average total cost and marginal cost for all quantities from 1 to 10. Use Excel (following the hints in QSet 2, #9) to produce a diagram of the firm’s average total cost and marginal cost curves.

2. If the price of oil is $10 a bottle, approximately what quantity will this producer make? (You will get credit for answering anywhere within 0.2 units of the correct answer.)

A theater has 500 seats, divided into orchestra, main, and balcony seating. Orchestra seats sell for $50, main seats for $35, and balcony seats for $25. If all the seats are sold, the gross revenue to the theater is $17,100. If all the main and balcony seats are sold, but only half the orchestra seats are sold, the gross revenue is $14,600. How many balcony seats are there?

Give examples of how to calculate total revenue, total cost, variable cost, fixed cost, marginal cost, ATC, AFC, and AVC.

What is the water-diamond paradox?

Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties. She is asking you (her accountant) for some advice on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Funland, Waterworld, and Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Park managers meet with the CEO at least once annually to review their performance, where each park manager’s performance is measured by their park’s return on investment (ROI). The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital.

Fatima’s first difficulty is with the Funland park. Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood roller coaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance and insurance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction. Fatima (doing a quick mental calculation) saw that the investment had a payback period of eight years—much shorter than the life of the roller coaster—and is perplexed at Janet’s decision.

The second dilemma concerns the Waterworld park. Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same base pay rate, which he says he will accept if his performance is not appropriately acknowledged. Fatima needs to look at the relative performance across parks to determine how to proceed with David.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Included in the ‘Fixed COGS’ for Treetops is a $86,000 mortgage payment on the land and buildings for the park, which would still need to be paid by Central Adventures if the park is closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

The ‘Selling and administrative costs’ are all incurred directly by each park, and are determined at the beginning of each year (that is, they do not change with the number of tickets sold). In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a cost of capital of 12 percent (and Fatima uses the cost of capital as their required rate of return) and are subject to 18% income taxes.

Fatima needs to evaluate this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

Required:

Write your response in the form of a 1-2 page memo to Fatima Hopkins, from the perspective of the company accountant. Be sure to include all your financial analyses, clearly showing your calculations, to support your conclusions. Be sure to include the following points in your memo, and provide the appropriate financial analysis(es) to support your conclusions.

a. Evaluate Janet Lieberman’s (the Funland park manager) decision. Explain why it was/was not in Central Adventure’s overall best interest for Funland to reject the new rollercoaster.

B. Evaluate the validity of David Copperfield’s (the Waterworld park manager) complaint. Explain why it is (or is not valid), and what further information would be necessary.

The management of 50-room Gordion Hotel, which has single and double rooms only, has acquired the following internal financial data: • Occupancy of 65.00% • Projected after-tax average daily room rate (ADR) of $54.00 • 25.00% of double room occupancy • A price difference of $15.00 more for double rooms than the singles Based on the financial information given, calculate the individual ADRs for single and double rooms for Gordion.

The operation team of H hotel, which has 25 rooms on daily basis, has projected that the occu-pancy will be 60.00% with total revenue of $620,000 and total expenses of $50,000 for the next year. The income tax bracket is 40.00%. Assume that there are only single and double rooms for H with a double occupancy of 70.00% and the double rooms are sold at a percentage markup of 20.00% over singles. Based on the information given, what are the individual average daily room rates (ADRs) for both single and double rooms for H hotel for the next year (assume that there are 365 days in a year)?

Playland at Pacific National Exhibition is an amusement park offering 31 different rides (including 4 rollercoasters and 1 water ride). The guests who are 48” or taller can go on any ride they want and so they get more value from visiting the park; let us say their individual demand is given by P = 5 – 0.25qO, where P is the price per ride ($ per ride) and qO is the number of the rides (per day) (the subscript O stands for “One Day;” that’s how the park calls its passes for the guests who are 48” or taller). The guests who are under 48” are not allowed on certain rides so they get less value from visiting the park; let us say their individual demand is given by P = 4 – 0.25qJ, where P is the price per ride ($ per ride) and qJ is the number of the rides (per day) (the subscript J stands for “Jr. One Day;” that’s how the park calls its passes for the guests under 48”). Assume it costs the park flat ¢25 per guest to operate a single ride, and it costs the park flat ¢75 to issue a single ticket to a ride. Assume there are 500 guests 48” or taller and 500 guests under 48” on an average day. We can consider Playland a monopolist in Vancouver

If Playland employed a second-degree price discrimination scheme (single ride tickets are issued, each rider receives a book of tickets [qO or qJ]),

what is Playland’s profit on an average day ($ per day)? Assume zero fixed cost

Central Adventures

Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties. She is asking you (her accountant) for some advice on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Funland, Waterworld, and Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Park managers meet with the CEO at least once annually to review their performance, where each park manager’s performance is measured by their park’s return on investment (ROI). The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital.

Fatima’s first difficulty is with the Funland park. Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood roller coaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance and insurance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction. Fatima (doing a quick mental calculation) saw that the investment had a payback period of eight years—much shorter than the life of the roller coaster—and is perplexed at Janet’s decision.

The second dilemma concerns the Waterworld park. Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same base pay rate, which he says he will accept if his performance is not appropriately acknowledged. Fatima needs to look at the relative performance across parks to determine how to proceed with David.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Included in the ‘Fixed COGS’ for Treetops is a $86,000 mortgage payment on the land and 9,351,510closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

The ‘Selling and administrative costs’ are all incurred directly by each park, and are determined at the beginning of each year (that is, they do not change with the number of tickets sold). In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a cost of capital of 12 percent (and Fatima uses the cost of capital as their required rate of return) and are subject to 18% income taxes.

Fatima needs to evaluate this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

Required:

Write your response in the form of a 1-2 page memo to Fatima Hopkins, from the perspective of the company accountant. Be sure to include all your financial analyses, clearly showing your calculations, to support your conclusions. Be sure to include the following points in your memo, and provide the appropriate financial analysis(es) to support your conclusions.

a.     Create a segmented income statement for Central Adventures.

b.     Calculate the current annual ROI, residual income and EVA for the three parks.

c.     Evaluate Janet Lieberman’s (the Funland park manager) decision. Explain why it was/was not in Central Adventure’s overall best interest for Funland to reject the new rollercoaster.