Problem 3 - Hubbart Formula (35 Points) The Ringwraith Inn is a proposed 100-room hotel with a projected occupancy rate of 88% that will be open 365 days a year. The total cost to construct the hotel is $6,000,000. of this amount, the owner will invest 50% and the owner wants a 12% return on their investment. The rest will be financed by a bank loan at an interest rate of 8%. The assumed income tax rate is 35%. Fixed costs are estimated to be $500,000 Operating expenses are estimated at $200,000 and 8% of room sales. Management Fees are 8% of Room Sales Room Department expenses are estimated to be $100,000 plus $18 per room. The hotel will have a restaurant that is expected to have a profit of $50,000 for the year. The hotel will have a gift shop that is expected to lose $25,000 for the year. a. Determine the Average Daily Rate using the Hubbart Formula. b. If the double rooms are sold at a premium of $15 over single rooms, what is the price of single and double rooms? Just round to nearest dollar. Assume a double occupancy rate of 75%