1. additional meals as a result of the proposed 2.all figures in pounds, no need to change currency.3. All hotels have 80 bedrooms, with double beds, and operate for 365 days per year.

4.Sales volume is measured in room nights. Guests are charged per room per night (regardless of

single or double occupancy), including buffet breakfast.5A light bites and beverages menu is offered 14.

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LONG-TERM CAPITAL INVESTMENT A draft proposal has been prepared by the Exeter hotel manager to expand and upgrade the existing kitchen facilities, in order to increase both its serving capacity and food offerings to include cooked meals at breakfast and evenings. An alternative proposal is to close the restaurant and transform the space into a facility for meetings and conferences. If there is investment in the expansion and upgrade, the additional cash costs and revenues are estimated to be as follows: Investment Cash flows £ Revenue Cash Flows £ Cost Cash Flows (55%) £ Net Cash Flows Additional Meals Discount Rates and Factors: 0 10% 11% 12% 13% 14% 15% 1.000 1.000 1.000 1.000 1.000 1.000 Year 1 0.909 0.901 0.893 0.885 0.877 0.870 2 0.826 0.812 0.797 0.783 0.769 0.756 0 (£200,000) (£200,000) 3 0.751 0.731 0.712 0.693 0.675 0.658 4 1 All Buenos Dias projects have a cost of capital requirement of 11% and are evaluated on a 4-year basis. The internal return of the project has been calculated as approximately 12%. 0.683 0.659 Financing of proposals under €250,000 are the responsibility of individual hotels. Requirement: Section A of your report to the Exeter hotel manager Make a recommendation on proceeding with the proposal, highlighting any points to support your advice, or are recommended for query / further consideration before a final decision. 0.636 0.613 0.592 0.572 2 6,500 3 £130,000 £140,000 £150,000 £160,000 £75,000 £80,000 £90,000 £70,000 £60,000 £65,000 £70,000 £70,000 7,000 4 7,500 8,000 25 Marks LONG-TERM CAPITAL INVESTMENT A draft proposal has been prepared by the Exeter hotel manager to expand and upgrade the existing kitchen facilities, in order to increase both its serving capacity and food offerings to include cooked meals at breakfast and evenings. An alternative proposal is to close the restaurant and transform the space into a facility for meetings and conferences. If there is investment in the expansion and upgrade, the additional cash costs and revenues are estimated to be as follows: Investment Cash flows £ Revenue Cash Flows £ Cost Cash Flows (55%) £ Net Cash Flows Additional Meals Discount Rates and Factors: 0 10% 11% 12% 13% 14% 15% 1.000 1.000 1.000 1.000 1.000 1.000 Year 1 0.909 0.901 0.893 0.885 0.877 0.870 2 0.826 0.812 0.797 0.783 0.769 0.756 0 (£200,000) (£200,000) 3 0.751 0.731 0.712 0.693 0.675 0.658 4 1 All Buenos Dias projects have a cost of capital requirement of 11% and are evaluated on a 4-year basis. The internal return of the project has been calculated as approximately 12%. 0.683 0.659 Financing of proposals under €250,000 are the responsibility of individual hotels. Requirement: Section A of your report to the Exeter hotel manager Make a recommendation on proceeding with the proposal, highlighting any points to support your advice, or are recommended for query / further consideration before a final decision. 0.636 0.613 0.592 0.572 2 6,500 3 £130,000 £140,000 £150,000 £160,000 £75,000 £80,000 £90,000 £70,000 £60,000 £65,000 £70,000 £70,000 7,000 4 7,500 8,000 25 Marks

Answer rating: 100% (QA)

Answer Calculation of NPV 0 1 2 3 4 Net cash flows 200... View the full answer