SUMMARY
The case study is mainly about the manufacturer of truck campers and the requirements ask for the evaluation of the financial analysis of the company. Hence, this analysis will only be possible if the account of the net present value, the internal rate of return and the profitability index as well as the payback period is taken.
Moreover, the case states about the sunk costs that are mainly incurred at the time of development of the project or conducting feasibility study in order to evaluate the capability of the project. Despite this, the case also requires the treatment of variable costs and the fixed costs of Hoosier Camper Inc. The reason behind HC incurringcost for development is related to the foreseeable competition with other truck campers who are available in the market.
HC is mainly trying to stop its production of the existing line of product in a time period of two years. Thereafter, the company is planning on increasing the number of units sold asthis will result in the generation of the higher revenue and HC will also be able to overcome its variable as well as the fixed costs.
Hence, this will allow the company to outperform the other rivals who are operating in the same industry. However, the increase in the sales price means that the company is trying to overcome the costs that it has incurred in the past in terms of development and the feasibility study. However, the case study also mentioned about the depreciation that has also been taken into consideration.
On the other hand, the net working capital has been assumed to be 15.00% and this percentage is applied onto the sales of the units. Moreover, the time period for which this project is going to take place is five years. The case study also requires taking into consideration the payback period asthe investors will be interested to know about the time period that will be undertaken by the project in order to pay back the investments they have made. .........
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