You are asked to evaluate a 4-star hotel which was

You are asked to evaluate a 4-star hotel which was built 8 years ago.
The gross area of the building is 10,000m² and the total outdoor area is 6,000m².
The expected lifetime of the improvement is 70 years. The land size is 12,000m².

You find that building with the same functionality would have following construction costs.

Direct construction costs:

Building: $3,500 per m2

Outdoor area: $600 per m2

Indirect costs:

Planning fees and site preparation costs: $160,000

Professional fees: 7% of direct construction costs

Finance costs: 6% of direct construction costs

You have identified the following information from three recent vacant land sales similar to the site of the subject property.

It is reported that the land prices show an increase of 6% per year in this area.

You also collected the following financial information for the hotel based on Good Average Management.

Revenue

Accommodation $ 7,550,000

Food and beverages $ 560,000

Telecommunications $ 17,000

Other services $ 560,000

Government subsidy (One-off) $ 20,000

Cost of Goods Sold

Purchases for hotel rooms $ 451,000

Purchase of food and beverages $ 200,000

Other cost of purchases $ 95,000

Expenses

Wages and staff benefits $ 1,200,000

Stationary and postages $ 5,000

Telephone and faxes $ 45,000

Promotional expenses $ 12,500

Building maintenance and repairs $ 45,000

Other working expenses $ 34,450

Depreciation/Amortization $ 60,000

Directors fees $ 180,000

Bank interests $ 34,920

Fine for breaking the environmental rule (One-off.) $ 10,000

Rentalisation rate 50%

Land Tax $ 15,000

Capitalization rate 7.5%

Use two (2) valuation methods to evaluate the above property based on the information given.