MGT 160 Homework #5
Due Wednesday, November 9
th
9.2
(295)
Relevant Cash Flows
.
Winnebagel Corp. currently sells 28,000 motor homes per year at
$73,000 each and 7,000 luxury motor coaches per year at $115,000 each.
The company wants to
introduce a new portable camper to fill out its product line; it hopes to sell 23,000 of these campers per
year at $19,000 each.
An independent consultant has determined that if Winnebagel introduces the
new campers, it should boost the sales of its existing motor homes by 2,600 units per year and reduce
the sales of its motor coaches by 850 units per year.
What is the amount to use as the annual sales
figure when evaluating the project?
Why?
9.6
(296)
Calculating Salvage Value.
Consider an asset that costs $780,000 and is depreciated straight
line to zero over its eightyear tax life.
The asset is to be used in a fiveyear project; at the end of the
project, the asset can be sold for $135,000.
If the relevant tax rate is 35 percent, what is the aftertax
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 Fall '08
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