Answer:
1.) Inn's annual total revenue = $7,300,000
2.) Inn's annual net operating income = $1,095,000
3.) Inn's debt service coverage ratio for the year = 9.13
Explanation:
The room revenue is first calculated as follows:
Room revenue = Number of guestrooms * ADR * Percentage of occupancy * 365 days = 200 * $100 * 70% * 365 = $5,110,000
We can now proceed as follows:
1.) Determine the Inn's annual total revenue.
Annual total revenue = Room revenue / Paid occupancy percentage = $5,110,000 / 70% = $7,300,000
2.) Determine the Inn's annual net operating income
Annual net operating income = Total revenue * 15% = $7,300,000 * 15% = $1,095,000
3.) Determine the Inn's debt service coverage ratio for the year.
Debt service coverage ratio = Net operating income / Annual debt service = $1,095,000 / ($10,000 * 12) = 9.13
