Question

Winnebagel Corp. currently sells 21,000 motor homes per year at $59,000 each, and 7,500 luxury motor coaches per year at $96,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 16,000 of these campers per year at $9,500 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,500 units per year, and reduce the sales of its motor coaches by 1,200 units per year. What is the amount to use as the annual sales figure when evaluating this project? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)

Annual sales $

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.55 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,030,000 in annual sales, with costs of $725,000. If the tax rate is 35 percent, what is the OCF for this project? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)

OCF

$

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.43 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,990,000 in annual sales, with costs of $685,000. The tax rate is 30 percent and the required return on the project is 18 percent. What is the project’s NPV? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

$

Answer 1

Motor Home Annual Sales = 21000 units at $ 59000 per unit

Luxury Motor Coaches = 7500 units at $ 96000 per unit

After the introduction of the new portable camper, the sales of motorhomes go up by 2500 units per annum and the sales of motor coaches reduce by 1200 units per annum.

New Sales Volume of Motor Homes = 21000 + 2500 = 23500 units at $ 59000 per unit

New Sales Volume of Luxury Motor Coaches = 7500 - 1200 = 6300 units at $ 96000 per unit

Sales Volume of Portable Camper = 16000 unit at $ 9500 per unit

Annual Sales Revenue Figure = 59000 x 23500 + 96000 x 6300 + 9500 x 16000 = $ 2143300000

NOTE: Please raise separate queries for solutions to the remaining unrelated questions.