hw_ch10 - CHAPTER 10 MAKING CAPITAL INVESTMENT DECISIONS...

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MAKING CAPITAL INVESTMENT DECISIONS Solutions to Questions and Problems NOTE: All end of chapter problems were solved using a spreadsheet. Many problems require multiple steps. Due to space and readability constraints, when these intermediate steps are included in this solutions manual, rounding may appear to have occurred. However, the final answer for each problem is found without rounding during any step in the problem. Basic 2. Sales due solely to the new product line are: 19,000($13,000) = $247,000,000 Increased sales of the motor home line occur because of the new product line introduction; thus: 4,500($53,000) = $238,500,000 in new sales is relevant. Erosion of luxury motor coach sales is also due to the new mid-size campers; thus: 900($91,000) = $81,900,000 loss in sales is relevant. The net sales figure to use in evaluating the new line is thus: $247,000,000 + 238,500,000 – 81,900,000 = $403,600,000 3. We need to construct a basic income statement. The income statement is:
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This note was uploaded on 03/21/2011 for the course FIN 390 taught by Professor Wilson during the Spring '08 term at Metro State.

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hw_ch10 - CHAPTER 10 MAKING CAPITAL INVESTMENT DECISIONS...

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