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...
Consider the following
projected accounting information regarding a proposed new
project:
Year 0
Year 1
Year...
Consider the following
projected accounting information regarding a proposed new
project:
Year 0
Year 1
Year 2
Year 3
2019
2020
2021
2022
Equipment purchase
$70,000
$0
$0
$0
Working Capital
(account level)
15,000
12,000
8,000
0
Revenues
80,000
96,000
88,000
Expenses
30,000
36,000
33,000
Depreciation
12,500
12,500
12,500
Profit Before
Taxes
37,500
47,500
42,500
Taxes (@ 35%)
13,125
16,625
14,875
Net profit
24,375
30,875
27,625
A. Calculate the Year
0 cash flow from Property, Plant, and Equipment.
B. Calculate...
1. Use the following table to answer the following
questions:
Total Capital: $5,000.00
Debt to Capital...
1. Use the following table to answer the following
questions:
Total Capital: $5,000.00
Debt to Capital 50%
Debt: __???___
Interest Rate: 8.00%
Equity: $2,500.00
Tax Rate: 40.00%
_____Scenario #1 _____ Scenario 2 _____ Scenario 3
EBIT: $2,000.00 ------------ $1,500.00 --------- $1,000.00
(I) $ 200.00 ------------- $ 200.00 ------------ $ 200.00
EBT $1,800.00 ----------- $1,300.00 ----------
$__???__
(T) $ 720.00 -------------- $__???__ -------- $
320.00
NI $1,080.00 ------------ $ 780.00 ----------- $ 480.00
ROE: __???__% -------------- 31.2% -----------
19.20%
a) What...
Problem 11-1
A project that is expected to last six years will generate
incremental profit and...
Problem 11-1
A project that is expected to last six years will generate
incremental profit and cash flow before taxes and depreciation of
$23,000 per year. It requires the initial purchase of equipment
costing $60,000, which will be depreciated over four years. The
relevant tax rate is 28%. Calculate the project's cash flows. Enter
your answers in thousands. For example, an answer of $1 thousand
should be entered as 1, not 1,000. Round your intermediate
calculations and final answer to...
INCOME STATEMENT:
2016
2017
Sales
$100,000.00
$120,300.00
Cost of Goods Sold
$60,000.00
$72,180.00
Gross Margin
$40,000.00...
INCOME STATEMENT:
2016
2017
Sales
$100,000.00
$120,300.00
Cost of Goods Sold
$60,000.00
$72,180.00
Gross Margin
$40,000.00
$48,120.00
Depreciation
$16,000.00
$19,200.00
Administrative Costs
$9,000.00
$10,800.00
EBIT
$15,000.00
$18,120.00
Interest
$4,000.00
$4,000.00
Pre-tax income
$11,000.00
$14,120.00
Taxes
$4,400.00
$5,648.00
Net Income
$6,600.00
$8,472.00
Dividends
$0.00
$5,083.20
Addition to Retained Earnings
$6,600.00
$3,388.80
BALANCE SHEET AS OF 12/31/2017:
ASSETS
2016
2017
Cash
$5,000.00
$6,000.00
Inventory
$15,000.00
$18,000.00
Accounts Receivable
$15,000.00
$18,045.00
Current Assets
$35,000.00
$42,045.00
Net PPE
$80,000.00
$92,000.00
Total Assets (TA)
$115,000.00...
Consider the following condensed financials for Crean and
Crimson Foods: INCOME STATEMENT: 2013 Sales $114,750.00 Cost...
Consider the following condensed financials for Crean and
Crimson Foods: INCOME STATEMENT: 2013 Sales $114,750.00 Cost of
Goods Sold $68,850.00 Gross Margin $45,900.00 Depreciation
$19,200.00 Administrative Costs $10,800.00 EBIT $15,900.00 Interest
$4,000.00 Pre-tax income $11,900.00 Taxes $4,760.00 Net Income
$7,140.00 Dividends $0.00 Addition to Retained Earnings $7,140.00
BALANCE SHEET AS OF 12/31/2013: ASSETS 2013 Cash $6,000.00
Inventory $18,467.00 Accounts Receivable $17,212.50 Current Assets
$41,679.50 Net PPE $92,000.00 Total Assets (TA) $133,679.50
LIABILITIES & SHAREHOLDER EQUITY 2013 Accounts Payable
$30,000.00 Current...
Consider an asset with the following cash flows:
Year 0
Year 1
Year 2
Year 3...
Consider an asset with the following cash flows:
Year 0
Year 1
Year 2
Year 3
Cash flows ($ millions)
−72
31.20
28.80
26.40
The firm uses straight-line depreciation. Thus, for this
project, it writes off $24 million per year in years 1, 2, and 3.
The discount rate is 10%.
Complete the following table.
Does the economic depreciation equal the book
depreciation?
Is the book rate of return the same in each year?
Is the project's book profitability its...
Incremental Depreciation Schedule
Rumpel Felt Co.
Year 1
Year 2
ΔUCCt-1
$11,000
9.625
dr
0.125
0.25...
Incremental Depreciation Schedule
Rumpel Felt Co.
Year 1
Year 2
ΔUCCt-1
$11,000
9.625
dr
0.125
0.25
ΔDepr
1,375
2,406.25
ΔUCCt
9.625
7.218.75
To satisfy the demand for smooth felt, the Rumpel Felt Co.
purchased a felt press last year. The machine had an expected life
of 3 years at the time of purchase and an estimated salvage value
of $200 at the end of the 3 years. The machine was depreciated at
25%. The division manager reports that a new...
Incremental operating cash inflows???A firm is considering
renewing its equipment to meet increased demand for its...
Incremental operating cash inflows???A firm is considering
renewing its equipment to meet increased demand for its product.
The cost of equipment modifications is $ 1.85 million plus $ 110
comma 000 in installation costs. The firm will depreciate the
equipment modifications under? MACRS, using a? 5-year recovery
period? (see table LOADING...?). Additional sales revenue from the
renewal should amount to $ 1.18 million per? year, and additional
operating expenses and other costs? (excluding depreciation and?
interest) will amount to 40...