Question

Joseph and Mary, owners of Hotel Christmas have decided to sell their property. Hotel Christmas is a five-star full-service resort and has a trailing 12 months cash flow of $6,118,000. A neighboring limited-service property, The Motel, is valued at $16,000,000. The market cap rate for five-star, full-service properties in this area is 8.5%. Under standard market conditions, approximately how much would the sale price of the Christmas

Answer 1

the amount that would be considered for the sale price of the Christmas is $71,976,470.59

Step-by-step explanation:

The computation of the amount that would be considered for the sale price of the Christmas is given below;

We need to apply the following formula for the same

= Cash flow ÷ cap rate

= $6,118,000 ÷ 8.5%

= $71,976,470.59

By dividing the cash flow from the cap rate we simply determined the sale price

hence, the amount that would be considered for the sale price of the Christmas is $71,976,470.59