Author :

Randy P. Kudar, Larry Wynant, Steven Cox

Pages :

7

Product Type :

Case

Reference # :

9A85B008

Teaching Note :

Institute:

Ivey Publishing

Setting:

Kenya, Large

Year:

Keywords:

Break-Even Analysis, Accounting, International, Accommodation & Food Services

Summary/Abstract:

The general manager of a financial services company is examining a request for a loan to finance the completion of a hotel on the ocean shore in Kenya. Projected costs and revenues for the first three years are presented. The manager is trying to assess the validity of these estimates and whether he should recommend the loan. Learning Objective: This case allows the student to appraise a new hotel from a banker's point of view. The hotel has applied for new financing totalling Kshs 12 million. The bank is concerned with establishing the feasibility of the hotel, and also the prospects for repayment of the loan by the hotel's owners.