
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Ef 238.

Transcribed Image Text:(Related to Checkpoint 13.3) (Forecasting revenues using scenario analysis) Floating Homes, Inc. is a manufacturer of luxury pontoon and house boats that sell for $40,000
to $100,000. To estimate its revenues for the following year, Floating Homes divides its boat sales into three categories based on selling price (high, medium, and low) and
estimates the number of units it expects to sell under three different economic scenarios. These scenarios include a recession (Scenario I), a continuation of current conditions in
which the economy is level (Scenario II), and a strong economy (Scenario III). These estimates are given here:. Using these estimates, calculate the expected revenue for
Floating Homes, Inc. for the following year.
Data table
Probability
High-Priced Boats Category
Unit sales
Average price per unit
Medium-Priced Boats Category
Unit sales
Average price per unit
Low-Priced Boats Category
Unit sales
Scenario I
Scenario II
(Recession) (Level Economy)
29%
52%
45
$90,000
95
$67,000
410
$90,000
800
$67,000
190
Average price per unit
$45,000
(Click on the icon in order to copy its contents into a spreadsheet.)
1,500
$45,000
Scenario II|
(Strong Economy)
19%
1,025
$90,000
5,050
$67,000
4,500
$45,000
-
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