P6.2 A 25-room budget motel expects its occupancy next year to be 80%. The owners' investment is $402,800. They want an after-tax return on their 276 PROBLEMS 291 is $806,400. investment of 15%. Tax rate is 25%. Interest on a long-term mortgage is 10%. Present balance outstanding Depreciation rate on the building is 10% of the present book value of $700,200. Depreciation on the furnishings and equipment is at 20% of the consolidated present book value of $150,400. Other known fixed costs total $141,800 a year. At 80% occupancy rate the motel's operating expenses, wages, sup- plies, and laundry, etc. are calculated to be $55,400 a year. The motel has other income from vending machines of $5,210 a year. a. To cover all costs and produce the required net income after tax, what should the motel's average room rate be next year? b. If the motel operates at 30% double occupancy and has an $8.00 spread between its single and double rates, what will the single and double room rates be? Assume only one common room size, all with the same rates.

For each sentence in the following passage, decide whether it is necessary to add quotation marks or cite a source. Explain your reasoning.

Many people have made money investing in real estate in the past couple of years. However, what goes up, comes back down (1). EZHomeBuilders, a corporation that builds luxury homes, announced that falling real estate values are causing them to scale back some projects and cancel others (2). After they announced this, shares of EZHomeBuilders fell 50 percent on the New York Stock Exchange, closing at $27.14 per share (3). Shares of other major builders fell as well (4).

My aunt, Shelly Maughn, who is a residential real estate broker, says she thinks the market will return to the way it was about a decade ago, with prices increasing more slowly (5). She also used to work in retail sales and sold furnishings and appliances for homes where she watched sales go up and down with the housing market (6). When business for home builders slowed, business slowed for us, she says (7).

I worked as an intern in Aunt Shelly’s real estate office last summer and I really enjoyed it (8). One day, I hope to become a residential real estate broker and investor even though real estate can be a challenging career (9).

8. (This problem is required to submit) Bank of America’s Consumer Spending Survey collected data on annual credit card changes in seven different categories of expenditures: transportation, groceries, dining out, household expenses, home furnishings, apparel, and entertainment. Using data from a sample of 42 credit card accounts, assume that each account was used to identify the annual credit card charges for groceries (population 1) and the annual credit card charges for dining out (population 2). Using the difference data, the sample mean difference was 850 $d (Note: d = difference = groceries – dining out charges) and the same standard deviation was 1123 $ds . d = Difference = groceries charges – dining out charges. 10

a. Use math symbol to formulate the null and alternative hypotheses to test for no difference between the population mean credit card charges for groceries and the population mean credit card charges for dining out. (10%)

b. Use a 0.05 level of significance. What is the p-value? Use the p-value approach, can you conclude that the population means differ? (10%) (Note: without calculation process, explanation, and conclusion, no credit)

c. Which category, groceries or dining out, has a higher population mean annual credit card charge? What is the point estimate of the difference between the population means? What is the 95% confidence interval estimate of the difference between the population means? (10%) (Note: without calculation process and explanation, no credit)

41. An investor who holds a portfolio a. Owns investments in several industries. b. Owns more than one investment. c. Owns both bonds and stocks. d. Has invested an equal amount in several securities.

42. The rate of return from a portfolio is: a. Always greater than the return from any security within the portfolio. b. Equal to the rate of return from the best performing security in the portfolio. c. The weighted average of the rates of return of the securities in the portfolio. d. Not related to the rates of return of the securities in the portfolio.

43. What is the expected rate of return from the following portfolio: investor who holds a portfolio: Securit Expected Amount y A Return 12% Invested $ 20,000 B 15% $ 30,000 a. 11.75%. C 10% $ 50,000 b. 11.90%. c. 12.33%. d. 15.00%.

44. Compared to a domestic portfolio, a portfolio of equal size that is diversified across countries will have: a. Less systematic risk. b. Less unsystematic risk. c. A greater rate of return. d. A higher expected value.

45. The present value of cash flows to be received in the near term: a. Is more volatile than the present value of cash flows to received further in the future. b. Is equally volatile as the present value of cash flows to received further in the future. c. Is less volatile than the present value of cash flows to received further in the future. d. Has no relationship to the present value of cash flows to received further in the future.

46. In the Fisher model, nominal rates are comprised of the pure rate, the inflation premium, and the: a. Expected base level of rates. b. Transaction premium. c. Risk premium. d. Expected rate of inflation.

47. The rate of interest that would exist if there were no anticipated inflation or forecasted risk is the: a. Pure rate. b. Nominal rate. c. Forward rate. d. Risk-free rate.

48. The inflation premium represents rates to compensate a. Historic; lenders b. Expected; lenders c. Anticipated; borrowers d. Historic, borrowers inflation and is built into nominal interest for their expected loss in purchasing power.

49. The theories of the term structure of interest rates attempt to measure variations in interest rates by: a. Time. b. Risk differences. c. Issuer of securities. d. Anticipated inflation.

50. The term structure of interest rates refers to the relationship between:

A. Time and tax rate. B. Risk and time.C.Liquidity and risk.D.Yield and maturity.

Stephen Hall is a 25 year-old with an entrepreneurial dream and an eclectic background. His dream is to start a travel agency that specializes in sports-related trips. These would include travel packages to attend professional sports events throughout the world and multi-country tours that are built around specific sporting competitions. Stephen knows there are travel agencies that already do this, but he feels it is a growing market and his knowledge of sports and his ability to work well with customers should help him be successful. He estimates he needs $150,000 bankable business plans for entrepreneurial ventures 236 to start this business, most of which will go into marketing expenses. His father has agreed to give him $50,000 and now he is writing a plan to show to potential investors. Stephen’s background includes interest and experience in many sports. He was an excellent wrestler in high school and college where he majored in computer science and graduated with a 2.8 grade-point average. After graduating, he worked at a storefront travel agency that had no particular specialty. He currently is a customer-service rep for a regional airline at the major airport near his home. While in high school and college, Stephen held many part-time jobs including running the deep-fat fryer in a fast food restaurant, working for a moving company, and being a security guard at a movie theater. Without overstating his qualifications, Stephen wants to point out his knowledge, relevant work experience, and personal skills that will make potential investors confident in supporting his venture. But he feels somewhat defensive talking about his background. His school career was not stellar and his jobs have been largely minimum wage and clerical. Stephen is considering not including a resume in his plan and avoiding discussion of his own background in the text of his business plan. He is also wonders if there is some way to define his business strategy that would better match his qualifications or if he can describe his experience and skills in the best light without exaggerating. 1. Playing the role of a potential investor, what do you consider Stephen’s strengths and weaknesses? 2. What kind of resume should Stephen prepare? 3. Write a one paragraph description of Stephen that stresses how his qualifications and abilities could make this venture successful.

Case 1 airbnb, inc in 2017 mcgraw hill education connect

How would you illustrate and compare the business models for Airbnb, large hotels chains such as Marriott and Hilton, and bed & breakfast operators?

Select “true” for those statements that are accurate and choose “false” for those that are not.

1. Airbnb has a unique customer value proposition in its use of technology, shorter, more intimate stays, varying and different locales, and cheaper and unique accommodations.
     (Click to select)   True   False  
   
2. A chain hotel/motel’s customer value proposition is similar to that of Airbnb by its use of technology, unique accommodations, and varying prices.  
     (Click to select)   True   False  
   
3. A bed & breakfast’s profit formula is based on renting rooms and overall occupancy, the cost structure associated with operating brick and mortar locations, and possibly wages if it is large enough to need staff.
     (Click to select)   True   False  
   
4. Airbnb’s profit formula is based on transaction fees charged to users, the cost structure associated with developing and updating software and technology, marketing, and wages for engineers, professional management, and staff.
     (Click to select)   True   False  
   
5. A bed & breakfast is owned by a sole proprietor; their profit margin is not impacted if they do not rent rooms or have overall occupancy.
     (Click to select)   True   False  
   
6. Chain hotels/motels’ profit margin is dependent on generating sufficient revenues across multiple locations to cover fixed and variable costs globally. Profitable locations may be used to offset losses in unprofitable locations.
     (Click to select)   True   False  
   
7. Airbnb’s profit margin is contingent upon the fixed costs associated with operating hotels and bed & breakfasts.
     (Click to select)   True   False  
   
8. A bed & breakfast’s profit margin is dependent on generating revenues sufficient to cover fixed and variable costs.
     (Click to select)   True   False

Next Visit question map

Question 1 linked to 2 3 and 4of4Total

In the context of this course, you will be asked to address the issues/questions below for Marriott International, Inc. (MAR), www.marriott.com. When addressing the issues/questions, be sure to do so in the context of this course and Marriott. You have been appointed as the special assistant to the Chief Executive Officer (CEO), Arne Sorenson, who has asked you to address the following five situations:

(a) A fellow MBA alum from Lynn University, who now works in Admission at Lynn University would like to give each MBA student a benefit, which is programmed into the Lynn University ID card. This benefit would allow the student one night each month, depending on availability, for a room at the Marriott Courtyard for $40. Normally the room rate is $100 and the full cost of a night’s stay is $50. Discuss whether or not this would be feasible, i.e. Marriott is able to do this transaction without it being a donation.

(b) Marriott currently buys its ice machines from a manufacturer in China. A representative from a company in Vietnam is offering to sell them for 20% less than cost from the manufacturer in China. Discuss the issues that you would consider in deciding whether or not to accept this offer.

(c) The CEO wishes to develop an incentive plan for the hotel managers.

Before this is put into place, the CEO wishes you to make sure that budgeting

in the hotels is done correctly. He has asked you to submit a document discussing

the key points that you have learned in MBA 640. Be as thorough as possible.

(d) Marriott has only used absorption costing. The CEO has asked you

to explain the merits of using variable costing under certain circumstances.

(e) The CEO has asked you to explain how target costing/pricing would be used in

Marriott’s pricing policies.

1. Why can't a monopolist charge any price he wishes for his product? 2. The Government grants a single firm the right to sell food and drink in Yosemite National Park. What are thge tradeoffs associated with such a poicy? 3. Give two examples of natural monopolies. Should the government set price ceilings in natural monopoly markets? Why? 4. Monopolistic competition has some of the same characteristics as monopoly and some of the same characteristics as perfect competiton (hence the name "monopolistic competition"). List a few of these similarities. 5. Why do monopolistically competitive firms end up making zero economic profits? 6. Why does a monopolistically competitive firm choose the level of output where marginal cost equals marginal revenue? 7. Complete this statement by filling in the blanks with the words "increase" or "decrease": The entry of an additional firm in a mon. comp. market _____________ the profit per unit of output because entry _________ the price and _____________the average cost of production. 8. Consider the Utica Slappers, a hockey team that plays in an arena with 8,000 seats. The only cost associated with staging a hockey game is a fixed cost of $6,000: The team incurs this cost regardless of how many people attend a game. The demand curve for hockey tickets has a slope of $0.001 per ticket ($1 divided by 1,000 tickets): Each $1 increase in price decreases the number of tickets sold by 1,000. For example, here are some combinations of price and quantity: Price per ticket $4 $5 $6 $7......Quantity of tickets 8,000 7,000 6,000 5,000. The owner's objective is to maximize the profit per hockey game (total revenue minus the $6,000 fixed cost). a. What price will maximize profit? b. If the owner picks the price that maximizes profit, how many seats in the arena will be empty? c. Is it rational to leave some seats empty? 9. There are a wide variety of breakfast cereals on the marketin grocery stores, they usually take up an entire aisle. As a result, it is possible to purchase many cereals that are highly similar but have small distinguishing characteristics that differentiate them. a. List some cereals that are very close substitutes for one another b. What does society gain from having all of these varieties of breakfast cereal? c. What does society lose by having all of these varieties of breakfast cereal? 10. Briefly differentiate between collusion among firms in an oligopoly and an actual cartel. 11. Give a real world example of a duopoly and a cartel.

A company sells medical supplies to hospitals and healthcare facilities that are mostly located in the Michiana region. The company has 150 employees, and it is about to decide whether part of them should be encouraged to work remotely, and if so, how many employees should do that. There are many aspects to be analyzed such as productivity and collaboration, but you will focus on the costs of space and IT at the company’s main office versus the costs of working remotely.

The costs of office space include building rent and maintenance, utilities, cleaning, and insurance. The company estimates that those costs could be either one of three scenarios: (A) $60,000 per month for a building where all employees can be accommodated; (B) $50,000 per month for a building that can accommodate 100 employees; or (C) $40,000 per month for a building for 50 employees.

The main costs of IT include the lease, operation and maintenance of equipment (a desktop computer for each employee, and the office’s Wi-Fi access points, cabling, routers for the LAN/MAN) and a contract with a fixed Internet service provider. The equipment cost is $7,500 per month for scenario (A), $5,500 for (B) or $3,500 for (C). The cost with the fixed Internet service provider is (A) $5,000 per month for all employees; (B) $4,000 per month for 100 employees; or (C) $2,500 per month for 50 employees.

If some of the employees no longer work frequently at the central office, then the company can operate on a smaller office (i.e. B or C instead of A). On the other hand, the company will provide a laptop, smartphone and a cellular plan for each employee working remotely. The company already has a corporate cellular contract with Cerizon for some employees. If some employees are to work remotely, then the company will add them to the same contract. The contract includes the smartphones at no extra cost, and Cerizon charges $10 per GB for employees who use less than 5GB per month, $8 per GB for employees who use 5GB or more but less than 10GB per month, and $6 per GB for employees who use 10GB or more per month. The cost of each laptop is $1,000, which the company considers that depreciates linearly over its lifetime of 2 years.