Sub: Finance Topic: Income&CashFlowAnalysis
Question:
Relevant Cash Flows:
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Winnebagel Corp. Currently sells 40.800 motor homes per year at $61,200 eachm and 16,320
luxury motor coaches per year at $115,600 each. The company wants to introduce a new
portable camper to fill out its product line; it hopes to sell 28,560 of these campers per year at
$16,320 each. An independent consultant has determined that if Winnebagel introduces the
new campers, it should boost the sales of its existing motor homes by 6,800 units per year, and
reduce the sales of its motor coaches by 1,768 units per year. The amount to use as the annual
sales figure when evaluating this project is $_________________
Solution:
Units Selling Sales
Price Revenue
per unit
Projected Sales of Portable
Campers 28560 $16,320 $466,099,200
Add: Increase in Sales of Motor
Homes 6800 $61,200 $416,160,000
Less: Decrease in Sales of Motor $115,60
coaches -1768 0 -$204,380,800
Total Sales from the project $677,878,400
** End of the Solution **
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