Question

The owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will...

The owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will be $59,000, and rental costs for the shop are $39,000 a year. Depreciation on the repair tools will be $19,000. Prepare an income statement for the shop based on these estimates. The tax rate is 35%. Calculate operating cash flow for the year by using all three methods: (a) Dollars in minus dollars out; (b) Adjusted accounting profits; and (c) Add back depreciation tax shield. Should all the above approaches result in the same value for cash flow. Yes or No

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will be $69,000, and rental costs for the shop are $49,000 a year. Depreciation on the repair tools will be $29,000. The tax rate is 40%. Calculate operating cash flow for the year by using all three methods: (a) Dollars in minus dollars out; (b) Adjusted accounting profits; and (c) Add back depreciation tax shield.
The owner of a bicycle repair shop forecasts revenues of $220,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of $220,000 a year. Variable costs will be $65,000, and rental costs for the shop are $45,000 a year. Depreciation on the repair tools will be $25,000. The tax rate is 35%. Calculate operating cash flow for the year by using all three methods: (a) Dollars in minus dollars out; (b) Adjusted accounting profits; and (c) Add back depreciation tax shield. Method Operating Cash Flow a.Dollars in minus dollars out b.Adjusted...
The owner of a bicycle repair shop forecasts revenues of $240,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of $240,000 a year. Variable costs will be $70,000, and rental costs for the shop are $50,000 a year. Depreciation on the repair tools will be $30,000. The tax rate is 30%. a. Calculate operating cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach. Method Operating Cash Flow   Adjusted accounting profits $           Cash inflow/cash...
The owner of a bicycle repair shop forecasts revenues of $188,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of $188,000 a year. Variable costs will be $57,000, and rental costs for the shop are $37,000 a year. Depreciation on the repair tools will be $17,000. Prepare an income statement for the shop based on these estimates. The tax rate is 40%.                                           Income Statement 0
Each year, a bicycle repair shop receives $120,000 in total revenue. Annual costs include $40,000 for...
Each year, a bicycle repair shop receives $120,000 in total revenue. Annual costs include $40,000 for labor, $5,000 in parts, and $30,000 in equipment rental. The owner of the bicycle repair shop owns the building and could rent it out for $12,000 per year. She could be making $50,000 per year if she worked as a project manager instead. What is the owner's economic profit?
Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $12 million. Costs...
Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected to be 70% of sales, and depreciation is expected to be $1.8 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt. Set up an income statement. What is Berndt's expected net income? Enter your answer in dollars....
A capital budgeting project is being considered for implementation. The asset is a 3-year MACRS class...
A capital budgeting project is being considered for implementation. The asset is a 3-year MACRS class asset with a four-year project life. The cost of the asset, and the first year revenue and operating cost projections are provided in the table below: Price of Asset $280,000.00 Freight / Installation $20,000.00 Depreciation Schedule: Year 1 $99,000.00 Year 2 $135,000.00 Year 3 $45,000.00 Year 4 $21,000.00 Salvage Value $30,000.00 Increase in NWC $25,000.00 Revenues from project $260,000.00 Operating Costs (excluding depreciation) $115,000.00...
Examine Frank’s Motorcycle Business information when responding to questions about Ben’s business. These costs and incomes...
Examine Frank’s Motorcycle Business information when responding to questions about Ben’s business. These costs and incomes all refer to Frank’s first year of operation in business. On the first day of his first year in business, Frank withdraws $80,000 dollars from a savings account that earned 4% per year to purchase tools and equipment to start his own shop that will specialize in servicing motorcycles. Frank decides to operate his business out of a commercial property that he owns and...
Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $14 million. Costs...
Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $14 million. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to be $1.4 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndt's federal-plus-state tax rate is 35%. Berndt has no debt. Set up an income statement. What is Berndt's expected net income? Enter your answer in dollars....
Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $14 million. Costs...
Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $14 million. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to be $1.4 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndt's federal-plus-state tax rate is 35%. Berndt has no debt. Set up an income statement. What is Berndt's expected net income? Enter your answer in dollars....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT