Business, 21.02.2020 19:32, heavyhearttim

(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 below:

Scenario I

Recession)

Scenario II (Level Economy)

Scenario III (Strong Economy)

Probability

25%

50%

25%

High-Priced Boats Category

Unit sales

50

400

1,000

Average price per unit

$90,000

$90,000

$90,000

Medium-Priced Boats Category

Unit sales

100

800

3,000

Average price per unit

$70,000

$70,000

$70,000

Low-Priced Boats Category

Unit sales

200

1,500

5,000

Average price per unit

$50,000

$50,000

$50,000

Using these estimates, calculate the expected revenue for Floating Homes, Inc. for the following year.

Answers: 3

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(Forecasting revenues using scenario analysis) Floating Homes, Inc. is a manufacturer of luxury pont...