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Paradise Misplaced
Cost Approach to Value
Cost Approach to Value

 

Cost estimates new are based upon cost analysis by Taylor of “Nevada with F and E costs-estimated by Integrated Design Associates, Inc. of Los Angeles. These two firms have been involved in some of the larger hotel projects in recent years. These costs are in line with Marshall Valuation Service. However, cost estimates by Marshall Valuation Service are not considered to be highly reliable since no costs for structures similar to the subject are provided.

Since the improvements are new, assumed to be developed in a good quality and assumed to meet all County building codes, and since the improvements are functionally well designed and in a good location, there is no physical, functional or economic depreciation to be subtracted from the estimated costs.

The architecture and engineering fee is by contractual agreement with the architectural firm. In addition, other professional fees are added such as engineering, designing, special consultants, surveying, soils tests,-,and other related similar type costs.

The State of Nevada requires a deposit on the project taxes as gaming fees. The estimate of these taxes is received from the attorney for the subject development, through the architects. The bankroll for the operation and opening costs including filling of the slot machines, property taxes and insurance during construction, general and administrative salaries during construction, preopening expenses on entertainment, advertising and publicity, utilities during construction, preincorporation expenses, and postincorporation expenses, are as estimated by the architects for the project and are considered to be reasonable.

In the first previously submitted feasibility report, on the smaller project, a number of these costs were included in the entrepreneur's profit. Since these costs are more completely detailed in this update, no entrepreneur's profit is shown.

Furniture and fixtures are estimated $2,500 per room by the architect and this is in line with motor-motel facilities completed across the country. However, costs in addition to this are added which include the cost of the stage, stage lighting, decorating, convention facilities, and other costs, not typical to hotels outside the State of Nevada. In addition, the furnishings quality has been upgraded from the original reports since this figure was obtained from the architect. The gaming equipment costs are based upon direct quotes from Jean Jones of Nevada Dice. Gaming equipment costs are estimated as being approximately $1,845.00 for 5¢, 10¢, and 25¢ slots plus $85.00 for stands and slightly in excess of $1,900.00 for 50¢ and $1 slots plus stand costs. These price quotes are for multiple slot machines which will accept more than one coin. Prices for other gaming devices include $2,800.00 per 21 table and mini-baccarat table, $3,250.00 per crap table, $3,000.00 per roulette wheel, $3,400.00 per Big 6, $2,000.00 per baccarat table, and $600.00 per poker table. This does not include chairs or stools. The estimated cost for establishing a race and sports book operation is approximately $40,000.00 and the estimated cost for a keno operation is approximately $150,000.00. In addition to this, $30,000.00 is estimated as the cost of an accounting system and chairs.

The following page sets forth a summary to the Cost Approach to value and includes the construction costs, equipment costs, and the total value indicated by the Cost Approach.

 

 

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Last modified Wednesday, 02-Dec-2009 11:10:30 PST