None Winnebagel Corporation currently sells 29,000 motor homes per year at $67,000 each,and 11,500 luxury motor coaches per year at $104,000 each. The company wants tointroduce a new portable camper to fill out its product line; it hopes to sell 24,000 ofthese campers per year at $13,500 each. An independent consultant has determinedthat if Winnebagel introduces the new campers, it should boost the sales of its existingmotor homes by 2,300 units per year and reduce the sales of its motor coaches by 1,000units per year. What is the amount to use as the annual sales figure when evaluating thisproject? (Do not round intermediate calculations and enter your answer in dollars, notmillions of dollars, e.g., 1,234,567.)Annual sales

A firm should evaluate a certain project and only accept a potential project if it gives value to…

Answered: Winnebagel Corporation currently sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Winnebagel pic currently sells 30,000 mobile caravans per year at E52,000 each and 12,000 luxury stationary caravans per year at £91,000 each. The company wants to introduce a new caravanette to fill out its product line; it hopes to sell 19,000 of these caravanettes per year at £13,000 each. An independent consultant has determined that if Winnebagel introduces the new caravanettes, it should boost the sales of its existing luxury stationary caravans by 4,500 units per year, and reduce the sales of its mobile caravans by 850 units per year. What is the amount to use as the annua sales figure when evaluating this project a) © £409,500,000 b) £44.200,000 E247.000,000 None e) £612,300,000.
Phlight Restaurant is considering a delivery service. The firm expects that sales from the new service will be $150,000 per year. Phlight currently offers a sit-down service with annual sales of $100,000. While many of the delivery sales will be to new customers, Phlight estimates that 60% of their current sit-down customers will switch and use the delivery service. The level of incremental sales associated with introducing the delivery service is closest to: Select one: a. $90,000 b. $150,000 c. $60,000 d. $120,000
Bubbly Waters currently sells 320 Class A spas, 470 Class C spas, and 220 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that if it does, it can sell 395 units per year. However, if the new spa is added, Class A sales are expected to decline to 235 units while the Class C sales are expected to increase to 495. The sales of the deluxe model will not be affected. Class A spas sell for an average of $12,300 each. Class C spas are priced at $6,200 and the deluxe models sell for $17,200 each. The new mid-range spa will sell for $8,200. What annual sales figure should you use in your analysis?
Realforce is considering making a new mechanical keyboard. The company has spent $200,000 in research for a silent mechanical switch, which they can use on the new keyboard. Realforce estimates that they can sell $5,000 units of the new keyboard per year at $250 per unit for the next 4 years. The production cost per keyboard is $200. The fixed costs for the project will run $50,000 per year. To start the production, Realforce has to invest a total of $400,000 in manufacturing equipment, The equipment will be 100 percent depreciated over a straight line basis for the next 4 years and become valueless at the end of the project. The tax rate is 35 percent and the discount rate is 15 percent. a) What is the operating cash flow for this project? b) What is the project's NPV? c) Suppose that the manu facturing equipment will have a market value of $18,000 at the end of the project and the project requires an initial investment in net working capital of $10,000, which is fully recoverable at…
You are evaluating a new project for Globex Corporation as the company is planning to launch a new and very efficient mobile device named Meta-5050. The new product is expected to run for 5 years. To produce this new product, Globex needs to purchase new equipment that will cost $750,000. The company needs to spend another $10,000 for shipping and installation. You estimate the sales price of Meta-5050 to be $650 per unit and sales volume to be 800 units in year 1; 1,400 units in years 2-4; and 500 units in year 5. The cost of the contents, packaging and shipping are expected to be $225 per unit and the annual fixed costs for this project are $150,000 per year. The equipment will be depreciated straight-line to zero over the 5-year project life. The actual market value (salvage value) of these assets at the end of year 5 is expected to be $35,000. If this project is taken up, inventory will increase by $72,000, accounts receivable will increase by $36,850, and accounts payable will…
JigSaw Puzzle Company is a chain of 10 retail stores that sell puzzles. In order to more efficiently process and record sales, they are considering the purchase of a point-of-sale system. You have been asked to perform the cost-benefit analysis for this new system. The system will provide annual salary savings of $200,000 for each year of the system's 7-year life. The firm's cost of capital is 12%. The system development cost is projected to be $350,000. Annual operating costs (other than salaries) will rise by $60,000 if we implement the new system. The following factors are for 12%, and 7 years: Present value of a lump sum 0.452 Present value of an annuity 4.564 REQUIRED: Using net present value analysis, evaluate the economic feasibility of the proposed system. Your analysis in #1 above deals with only one aspect of feasibility. Briefly explain other aspects of feasibility that should be considered before a final…
Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $116,000 would need to be spent right away to buy the required fleet of drones. The drones will be losing their economic value in equal amount each year, fully over their 6-year economic lives. Once the drones economic life is over, they would all be sold for $8,700 selling price to a new owner, and Amazon would then immediately purchase the same but brand-new drones for the same price as what it paid for the initial fleet of drones. When those drones' life is over, they would again be sold and, again, brand-new ones would be purchased - all for the same prices as for the initial drones, and so on, over and over. Additional information: . .. Amazon expects $9,300 in annual operating costs. All future cash flows are year-end cash flows. Amazon pays 21 percent tax rate on all taxable income. Amazon requires an annual discount rate of 10 percent, and the rate is not…
Leaf's Paper Company is planning to launch a new notebook product that is water resistant. The company wants to sell 30,000,000 of the new notebooks next year and wants to know what trial rate is required to achieve this goal. The market research group forecasts an awareness rate of 73% and an AČV% of 52%. Of those that try the product by purchasing 1 notebook, 24% will repurchase 5 notebooks per year. There are 180,000,000 notebook consumers in the target market. Total fixed costs to Leaf Paper Company to manufacture this new notebook are $10,000,000, with variable costs of $2.73 per notebook. What trial rate is required to achieve the company's goal?
Parasite Engineering is developing a new product for the parasitic market that services parasites. The opportunity is estimated to be worth $1.0B measured in today’s dollars. The company will need to spend $500M today to begin the research. In five years, the company will have to make a decision as to whether to go into full scale production and begin selling the drug. At that time, the company estimates it will cost $1.5B to move forward. If the appropriate risk-free rate is 2.5%, how high must the annual volatility be to make the project worth beginning?
Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $125,000 would need to be spent right away to buy the required fleet of drones. The drones will be losing their economic value in equal amount each year, fully over their 6-year economic lives. Once the drones' economic life is over, they would all be sold for $9,300 selling price to a new owner, and Amazon would then immediately purchase the same but brand-new drones for the same price as what it paid for the initial fleet of drones. When those drones' life is over, they would again be sold and, again, brand-new ones would be purchased - all for the same prices as for the initial drones, and so on, over and over. Additional information: Amazon expects $9,600 in annual operating costs. • All future cash flows are year-end cash flows. ● Amazon pays 24 percent tax rate on all taxable income. • Amazon requires an annual discount rate of 9 percent, and the rate is not…
Your company is considering delivering their own products instead of relying on 3rd party logistics companies to make deliveries for them. If they invest in a fleet of trucks, they estimate that the initial investment for the vehicles will be $200,000. Annual maintenance and gas costs will be approximately $12,000, annual revenues will be $60,000, and the vehicles will be worth a total of about $20,000 at the end of their life. If you expect the vehicles to last for about 10 years and the company has a MARR of ? 15%, what is the present worth of the project?
Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $140,000 would need to be spent right away to buy the required fleet of drones. The drones will be losing their economic value in equal amount each year, fully over their 5-year economic lives. Once the drones' economic life is over, they would all be sold for $10,300 selling price to a new owner, and Amazon would then immediately purchase the same but brand-new drones for the same price as what it paid for the initial fleet of drones. When those drones' life is over, they would again be sold and, again, brand-new ones would be purchased - all for the same prices as for the initial drones, and so on, over and over. Additional information: • Amazon expects $10,100 in annual operating costs. . All future cash flows are year-end cash flows. • Amazon pays 24 percent tax rate on all taxable income. • Amazon requires an annual discount rate of 10 percent, and the rate is…

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