Question 1:
Score 0/1
Your response
Correct response
Relevant Cash Flows
Winnebagel Corp. currently sells 14,280 motor homes per year at $26,010 each, and 10,200 luxury motor coaches
per year at $15,810 each. The company wants to introduce a new portable camper to fill out its product line; it
hopes to sell 15,300 of these campers per year at $6,324 each. An independent consultant has determined that if
Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 5,100 units per
year, and reduce the sales of its motor coaches by 643 units per year. The amount to use as the annual sales figure
when evaluating this project is $
0
(0%).
(Enter your answer in dollars, not millions of dollars. Omit the
"$" sign in your response.)
Relevant Cash Flows
Winnebagel Corp. currently sells 14,280 motor homes per year at $26,010 each, and 10,200 luxury mo
per year at $15,810 each. The company wants to introduce a new portable camper to fill out its pro
hopes to sell 15,300 of these campers per year at $6,324 each. An independent consultant has determ
Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 5,1
year, and reduce the sales of its motor coaches by 643 units per year. The amount to use as the annual
when evaluating this project is $
219,242,370 with a tolerance of ± 0.01%
.
(Enter your
dollars, not millions of dollars. Omit the "$" sign in your response.)
Total grade:
0.0×1/1 = 0%
Feedback:
Sales due solely to the new product line are:
15,300($6,324) = $96,757,200
Increased sales of the motor home line occur because of the new product line introduction; thus:
5,100($26,010) = $132,651,000
in new sales is relevant. Erosion of luxury motor coach sales is also due to the new midsize campers; thus:
643($15,810) = $10,165,830 loss in sales
is relevant. The net sales figure to use in evaluating the new line is thus:
Net sales = $96,757,200 + 132,651,000 – 10,165,830
Net sales = $219,242,370
Question 2:
Score 0.71/1
Your response
Correct response
Calculating Projected Net Income
A proposed new investment has projected sales of $972,000. Variable costs are 62 percent of sales, and fixed
costs are $182,900; depreciation is $80,300.
Required:
Prepare a pro forma income statement assuming a tax rate of 37 percent.
(Round your answers to 2 decimal
places. Omit the "$" sign in your response.)
Income Statement
Sales
$
972000
(14%)
Variable costs
182900
(0%)
Fixed costs
602640
(0%)
Depreciation
80300
(14%)
EBIT
$
106160
(14%)
Taxes
39279.20
(14%)
Net income
$
66880.80
(14%)
Calculating Projected Net Income
A proposed new investment has projected sales of $972,000. Variable costs are 62 percent of sales
costs are $182,900; depreciation is $80,300.
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 Spring '07
 ANDELIN,STEVENLE
 Depreciation, Corporate Finance, depreciation tax shield

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