Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $16 million. Kim expects the hotel will produce positive cash flows of $2.56 million a year at the end of each of the next 20 years. The project's cost of capital is 12%.

A) What is the project's net present value? A negative value should be entered with a negative sign. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answer to two decimal places.

B) Kim expects the cash flows to be $2.56 million a year, but it recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $1.6 million. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be $3.52 million. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $16 million. Assume that all cash flows are discounted at 12%. Use decision-tree analysis to determine whether Kim should proceed with the project today or wait a year before deciding. Answers: 1) wait a year 2) decide now

Investment Timing Option: Option Analysis

Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $20 million. Kim expects the hotel will produce positive cash flows of $3 million a year at the end of each of the next 20 years. The project's cost of capital is 13%.

Kim expects the cash flows to be $3 million a year, but it recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $2.2 million. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be $3.8 million. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $20 million. Assume that all cash flows are discounted at 13%. Use the Black-Scholes model to estimate the value of the option. Assume that the variance of the project's rate of return is 0.0585 and that the risk-free rate is 6%. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places.

Use computer software packages, such as Minitab or Excel, to solve this problem.

$ ??? million

II. Room Pricing in the Off-Season (Modeling)

The data in the table, from a survey of hotels with comparable rates on Hilton Head Island, show that room occupancy during the off-season (November through February) is related to the price charged for a basic room.

The goal is to use these data to help answer the following questions.

1. What price per day will maximize the daily off-season revenue for a typical hotel in this group if it has  rooms available?

2. Suppose that for this typical hotel, the daily cost is  plus  per occupied room. What price will maximize the profit for this hotel in the off-season?

The price per day that will maximize the off-season profit for this typical hotel applies to this group of hotels. To find the room price per day that will maximize the daily revenue and the room price per day that will maximize the profit for this hotel (and thus the group of hotels) in the off-season, complete the following.

1. Multiply each occupancy rate by  to get the hypothetical room occupancy. Create the revenue data points that compare the price with the revenue, , which is equal to price times the room occupancy.

2. Find an equation that models the revenue, , as a function of the price per day, .

3. Use maximization techniques to find the price that these hotels should charge to maximize the daily revenue.

4. Find a model for the occupancy as a function of the price, and use the occupancy function to create a daily cost function.

5. Form the profit function.

6. Use maximization techniques to find the price that will maximize the profit.

Investment Timing Option: Option Analysis

Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $20 million. Kim expects the hotel will produce positive cash flows of $3 million a year at the end of each of the next 20 years. The project's cost of capital is 13%.

Kim expects the cash flows to be $3 million a year, but it recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $2.2 million. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be $3.8 million. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $20 million. Assume that all cash flows are discounted at 13%. Use the Black-Scholes model to estimate the value of the option. Assume that the variance of the project's rate of return is 0.0654 and that the risk-free rate is 8%. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places.

Use computer software packages, such as Minitab or Excel, to solve this problem.

$   million

1. Sjcam used a penetration pricing strategy to introduce its Legend action camera to compete with the latest GoPro offering. Which of the following conditions would argue for using a penetration pricing strategy when introducing this new camera?

a. A large potential market exists, even at a high price.

b. Technological problems still exist for competitors, prohibiting their entry into the market for at least six months.

c. Increasing volume substantially reduces production costs.

d. Consumers perceive a price-quality relationship.

e. The product is relatively price insensitive (price inelastic).

2. Apple offers its iPhone XS for $999, under the presumption that consumers see the smartphone as priced at “something over $900” rather than “about $1,000.” This is an application of what pricing strategy?

a. prestige pricing

b. below-market pricing

c. odd-even pricing

d. target pricing

e. customary pricing

3. Which of the following would be an example of a variable cost for a hotel like the Marriott Marquis Hotel, which caters to an upscale clientele?

a. the average daily rate paid by women in targeted demographics staying at the hotel

b. cleaning supplies and housekeeping wages

c. the salary of the hotel manager

d. the rent for a parking garage used by employees

e. the price charged for renting a ballroom in the hotel

4. Uber and Lyft customers often complain about the practice of “surge” or “prime-time” pricing used by these companies during periods of peak demand. This is an example of a __________ pricing policy.

a. promotional

b. competitive

c. discount

d. dynamic

e. customer

I've answered the first half, but im stuck on the second half with multilanes and i need help with it .

Highway Capacity and Level-of-Service Analysis

Freeways

A new segment of freeway is being built to connect two existing parallel freeway facilities, in an urban area. The following traffic and roadway characteristics are expected:

Traffic Characteristics

• AADT = 92000 veh/day

• K = 13%

• D = 50%

• PHF = 0.92

• 8% trucks and buses

• 3% RVs

• Primarily commuters

Roadway Characteristics

• Grade in peak direction: 1.42 miles, 3.25% upgrade

• Interchange density = 1.8 per mile

• Lane widths = 12 ft

• Shoulder widths = 4 ft

1. Determine the number of lanes necessary to ensure that this new freeway segment will operate at no worse than LOS D during the peak hour in the peak direction.

2. How much additional traffic, in the peak direction, can be accommodated before the freeway reaches capacity?

Multilanes

A section of a multilane highway is to be reconstructed to improve the level of service. The section being considered is on a 5.0% upgrade that is 3/4 mile long. The highway currently has 4-lanes (2 in each direction – all are 12-ft lanes) with a two-way left-turn lane in the middle and 4 foot shoulders on the right side. It is to be reconstructed into a 6-lane facility (3-lanes in each direction) undivided facility but, due to commercial development surrounding the highway, must remain in the current 72 foot right of way. There are currently 35 access points per mile and the free flow speed is determined to be 50 mi/h. It is known that the road currently operates at capacity with 420 trucks/buses (no recreational vehicles) during the peak hour, a peak hour factor of 0.95 and all-commuter traffic.

The redesign is to reduce the number of access points per mile to 10 and to reduce the grade to 4.0% for 3/4 mile. It is estimated that the new design will increase traffic by 13%.

1. Determine the lane width and shoulder width combination that will maximize capacity given that the 3 lanes (each direction) must fit within 36ft?

2. For the maximum-capacity lane/shoulder combination chosen above, determine the new design's level of service and density.

In the Keynesian cross model, assume that the consumption function is given by C=$70+0.7(Y−T)C=$70+0.7(Y−T) Planned investment is $200; government purchases and taxes are both $100.

What level of government purchases is needed to achieve an income of $1160? Assume taxes remain at $100.

What level of taxes is needed to achieve an income of $1160? Assume government purchases remain at $100.

Let the random variable X follow a normal distribution with a mean of μ and a standard deviation of σ. Let 1 be the mean of a sample of 36 observations randomly chosen from this population, and 2 be the mean of a sample of 25 observations randomly chosen from the same population.
a) How are 1 and 2 distributed? Write down the form of the density function and the corresponding parameters.
b) Evaluate the statement:
?(?−0.2?< ?̅1 < ?+0.2?)<?(?−0.2?< ?̅2 < ?+0.2?), as to whether it is true or false.

An 8-m-long, uninsulated square duct of cross section 0.2 m X 0.2 m and relative roughness 10-3 passes through the attic space of a house. Hot air enters the duct at 1 atm and 91oC at a volume flow rate of 0.15 m3/s. The duct surface is nearly isothermal at 60oC. Determine the rate of heat loss from the duct to the attic space and the pressure difference between the inlet and outlet sections of the duct. Evaluate air properties at a bulk mean temperature of 80oC. Is this a good assumption? Taking a bulk mean fluid temperature of 80oC based on the problem statement (this assumes that the air does not loose much heat to the attic), the properties of air are: cp = 1008 J/kg∙oC k = 0.02953 W/m∙oC ν = 2.097 × 10-5 m2/s ρ = 0.9994 kg/m3 Pr = 0.7154