You are the designer for a public address (PA) system to be installed for a new hotel. The hotel shall have 15 storeys, 230 rooms, one recreational floor, one car park floor, two restaurants, and two banquet rooms.

1. (a) One of the banquet rooms has dimensions 45 m (width) x 35 m (length) x 5.5 m (height). If ceiling-mounted loudspeakers of 110° coverage angle is to be installed, calculate the number of speakers required for the room. State clearly ALL your assumptions in the calculations. Draw a simple layout plan to show the locations of the loudspeakers.

The City of Waterloo is considering the adoption of improvements to Waterloo Park and is presented with three mutually-exclusive options. Option A adds a splash pad which is estimated to offer benefits of $20 million and costs $16 million to build. Option B adds basketball courts has estimated benefits of $26 million and costs of $20 million. Option C is a nature exploration area that is estimated to offer benefits of $10 million and has costs of $2 million. In additional, a fourth option D is an improved path and signage project that has estimated costs of $8 million and standalone benefits of $4 million, but it can be combined with any of the first three, changing their respective benefits as follows: if built with A, it augments its benefits by $16 million, if built with B it increase the benefits of project B by $10 million, but if built with C it reduces the benefits of project C by $2 million.

i. Generate a table with 2 columns: the benefit-cost ratio and net benefits for each possible option.

ii. Which option should be chosen according to the Cost Benefit decision rule?

Amy Richardson had been a well-paid sales manager of a major hotel chain for 15 years. Due to a hotel owner's illness, Amy was offered the opportunity to purchase a hotel near a seaside vacation area she had often visited. After obtaining a lawyer and a financial accountant to assist her, Amy did an analysis of the most recent financial statements of the hotel. Since the hotel had consistently shown a profit during the past few years, Amy thought that the price of the hotel was reasonable, so she decided to purchase the hotel. She resigned her position, obtained a loan, and purchased the hotel.

During the first year as a hotel manager, Amy received an offer from a tour operator who proposed to guarantee a considerable number of room reservations, including during the off-season. However, she turned down the offer because the tour operator asked for a 20% price reduction compared to the regular room rate. A few weeks later, she decided to shut down the restaurant, located in the main building of the hotel, in order to save expenses. With regard to general expenses, she was particularly concerned with the high room cleaning and service costs. On the sales side, although the reservations for the cheaper standard rooms were a bit sluggish, the more expensive large-size superior rooms had a very good occupancy rate of over 90%. The following year, there was a severe economic downturn and also a very bad weather season that reduced the number of guests and also caused a resulting mold situation in the hotel building that required expensive repair work. Amy ran short of cash, became emotionally distraught, and eventually had to sell the hotel at a significant loss.

Question:

Analyze Amy’s purchase decision and the subsequent events using the following key management accounting tools and concepts: Cost-Volume-Profit Analysis, Using Relevant Costs to Make Short-Term Decisions, Cost Management Using Full Costs and Budgeting. Make sure that you clearly indicate how each tool/concept could be used to explain potential management errors that Amy had made and could have helped her to improve decision-making and the financial results of the business.

Amy Richardson had been a well-paid sales manager of a major hotel chain for 15 years. Due to a hotel owner's illness, Amy was offered the opportunity to purchase a hotel near a seaside vacation area she had often visited. After obtaining a lawyer and a financial accountant to assist her, Amy did an analysis of the most recent financial statements of the hotel. Since the hotel had consistently shown a profit during the past few years, Amy thought that the price of the hotel was reasonable, so she decided to purchase the hotel. She resigned her position, obtained a loan, and purchased the hotel.

During the first year as a hotel manager, Amy received an offer from a tour operator who proposed to guarantee a considerable number of room reservations, including during the off-season. However, she turned down the offer because the tour operator asked for a 20% price reduction compared to the regular room rate. A few weeks later, she decided to shut down the restaurant, located in the main building of the hotel, in order to save expenses. With regard to general expenses, she was particularly concerned with the high room cleaning and service costs. On the sales side, although the reservations for the cheaper standard rooms were a bit sluggish, the more expensive large-size superior rooms had a very good occupancy rate of over 90%.

The following year, there was a severe economic downturn and also a very bad weather season that reduced the number of guests and also caused a resulting mold situation in the hotel building that required expensive repair work. Amy ran short of cash, became emotionally distraught, and eventually had to sell the hotel at a significant loss.

Required:

Analyze Amy’s purchase decision and the subsequent events using key management accounting tools and concepts. Make sure that you clearly indicate how each tool/concept could be used to explain potential management errors that Amy had made and could have helped her to improve decision-making and the financial results of the business.

• Introduction to Management Accounting
• Cost-Volume-Profit Analysis   
• Using Relevant Costs to Make Short-Term Decisions
• Cost Management Using Full Costs
• Budgeting

A plant to make 30 000 t y^-1 of glycerine and comprising 11 process steps was built in the UK five years ago, with a total investment cost of GBP 48 million. A new plant for the production of 50 000 t y^-1 of glycerine is now to be built near Ankara, Turkey. Because of more stringent international legislation, new glycerine plants require additional pollution control equivalent to 3 further process steps. Estimate the total investment cost in TRY (Turkish Lira) of such a plant using the data below.

Scale factor = 0.6

Owners of an economy motel chain are considering building a new 200-unit motel in Riverside, CA. The present worth cost of building the motel is $8,000,000; the firm estimates furnishings for the motel will cost an additional $800,000 and will require replacement every 5 years. Annual operating and maintenance costs for the facility are estimated to be $800,000. The average rate for a unit is anticipated to be $60/day. A 15-year planning horizon is used by the firm in evaluating new ventures of this type; a terminal salvage value of 15% of the original building cost is anticipated; furnishings are estimated to have no salvage value at the end of each 5-year replacement interval. Assume an average daily occupancy percentage of 80%, a MARR of 12%, 365 operating days/year, and ignore the cost of the land. (Assume the furnishings are not replacement at EOY 15.)

What is the present worth, internal rate of return, external rate of return?

Please answer all parts of the question, and include a cashflow diagram.

Phillip is planning on opening an electronics store. He will run it for only 1 year. The initial cost for opening a store is 500K and it will generate an EBIT of 800k at the end of year for sure. Risk-free rate is 5%, tax rate is 35%. Suppose John’s current wealth is 50k. He can borrow money from a bank. Bank knows that his electronic store will generate EBIT of 800k at the end of year for sure.

In this situation, would he want to open the electronic store?

What is the value of his equity of the electronic (at t=0) if he opens it?

If he opens the restaurant at t=0 and sells the entire ownership of the electronic store to Zach at t=0, with what price can Phillip sell the ownership? How much return did Phillip make relative to his investment at t=0?

Sammy Sosa was staying at the Holiday Inn Hotel in Manhattan when he tripped on a carpet that was buckled. He hit his head on a dresser and sustained severe injuries to his face. The week before, another patron of the hotel tripped on the carpet in the same room and broke her wrist as a result. The hotel management put in a work order to have the carpet fixed and it was to be repaired as soon as Mr. Sosa checked out of the room.

Greta Garbor, the hotel owner, has a franchise agreement with the Holiday Inn Corporation. The agreement allows Ms. Garbor to use the name Holiday Inn and requires that the style of the building, the furnishings, and all the equipment in the hotel conform to certain specifications. In order to repair the carpet, Ms. Garbor had to order a replacement part from a Holiday Inn authorized dealer. The replacement carpet had to conform to Holiday Inn’s specifications. It could not be delivered for ten (10) days, which delayed the repair.

According to the agreement between Ms. Garbor and Holiday Inn, Garbor is responsible for the day-to-day operations, the rates charged, and she keeps the profit after paying Holiday Inn a franchise fee. All the employees work for Garbor, although they are required to wear nametags with the Holiday Inn name and logo. Holiday Inn also provides stationary and pens with the Holiday Inn name and logo that are used by the employees and provided free of charge to the customers. The web site for this particular hotel can be accessed through the Holiday Inn platform. On Ms. Garbor’s hotel web site, the masthead says: Holiday Inn Manhattan Greta Garbor, Owner.  

Mr. Sosa is suing both Holiday Inn and Ms. Garbor for his injuries:

1. Explain why Holiday Inn should be held liable for the injuries; 2. Explain why Holiday Inn should not be held liable; 3. Do you think Holiday Inn should be held liable? Why or why not?   

Suppose a group of volunteers is planning on building a park near a local lake. The lake is known to contain low levels of arsenic (As). Therefore, prior to starting construction, the group decides to measure the current level of arsenic in the lake.

a) If a 15.7 cm3 sample of lake water is found to have 164.5 ng As, what is the concentration of arsenic in the sample in parts per billion (ppb), assuming that the density of the lake water is 1.00 g/cm3?

One of the volunteers suggests hiring an on-site water treatment company to remove the arsenic from the lake. The company claims their process takes 2.74 days to remove 41.90 kg of As from a water source.

b) Calculate the total mass (in kg) of arsenic in the lake that the company will have to remove if the total volume of water in the lake is 0.710 km3?

c) Based on the company\'s claim and the concentration of arsenic in the lake, how many years will it take to remove all of the arsenic from the lake, assuming that there are always 365 days in a year?

Suppose a group of volunteers is planning on building a park near a local lake. The lake is known to contain low levels of arsenic (As). Therefore, prior to starting construction, the group decides to measure the current level of arsenic in the lake.

a) If a 15.7 cm3 sample of lake water is found to have 164.5 ng As, what is the concentration of arsenic in the sample in parts per billion (ppb), assuming that the density of the lake water is 1.00 g/cm3?

One of the volunteers suggests hiring an on-site water treatment company to remove the arsenic from the lake. The company claims their process takes 2.74 days to remove 41.90 kg of As from a water source.

b) Calculate the total mass (in kg) of arsenic in the lake that the company will have to remove if the total volume of water in the lake is 0.710 km3?

c) Based on the company\'s claim and the concentration of arsenic in the lake, how many years will it take to remove all of the arsenic from the lake, assuming that there are always 365 days in a year?