4. Peyton Jackson knows that applying cap rates is a good way to estimate the value of a lodging property. He is consider ing the purchase of three different properties. The financial information he has about them is presented below. Using that information, help Peyton calculate the answers needed to make a good purchase decision. Property LaSalle Inn The Breakers Lodge The Waterford Last Year Sales (5) 1.541.250 3.117.500 2.700.000 Last Year Net Operating Income (NOI) (5) 375,450 623,750 541,200 a. If Peyton could pay $3,000,000 for it, what would be the cap rate for the La Salle Inn, based upon the NOE it achieved last year? $3.000.000 Net Operating Income Investment Amount Cap Rate b. If Peyton could pay $7,000,000 for it, what would be the cap rate for the Breakers Lodge, based upon the NOI it achieved last year? $7,000,000 Net Operating Income Investment Amount Cap Rate c. If Peyton could pay $6,000,000 for it, what would be the cap rate for the Waterford, based upon the NOI it achieved last year? $6,000,000 Net Operating Income Investment Amount Cap Rate d. If Peyton is satisfied with a hotel purchase returning a 10.5% cap rate: At what price would he value the LaSalle Inn 10.5% Net Operating Income Investment Amount Cap Rate 488 Chapter 12 Capital Investment, Leasing, and Taxation At what price would he value the Breakers Lodge? Net Operating Income Investment Amount Cap Rate % 10.5% At what price would he value the Waterford? Net Operating Income Investment Amount Cap Rate% 10.5% e. Based upon Peyton's acceptable cap rate of 10.5%, which hotel do you think likely represents his best investment option? Explain the reason for your