# Chap9 - Homework Manager Corporate Finance FIN301-004...

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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 mid-size 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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Chap9 - Homework Manager Corporate Finance FIN301-004...

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