Executive Inn Case 5-2: DUE OCTOBER 10

Comments to be considered carefully:

The discount factors are on a table on page 120 or you may use Excel. You may cut and paste Excel worksheets into your Word document if you wish.

The case must be prepared in a Word document. The computations may be prepared on a single Excel spreadsheet which you cut and past into Word.

If the solution does not include a reasonable attempt at the supplemental question, there will be a 20 percent penalty.

Parts (a) through (e) are direct questions and require complete sentences and supporting computations. Incomplete sentences will result in a 10 percent penalty.

Supplemental Questions (Required):

1. Calculate the discounted cash flow analysis assuming a weighted-average cost of capital of eight and ten percent.
2. How does changing the weighted-average cost of capital affect the answers to parts (a) through (d)?