1. a.

Winnebagel Corp. currently sells 42,248 motor homes per year at $51,767 each, and 10,875 luxury motor coaches per year at $96,170 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 20,067 of these campers per year at $23,059 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 3,218 units per year, and reduce the sales of its motor coaches by 988 units per year. What is the amount to use as the annual sales figure when evaluating this project?

b.

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1,949,749. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $1,860,956 in annual sales, with costs of $1,705,925. If the tax rate is 0.32 , what is the OCF for this project?