Calculate the projected net income

Assignment Help Financial Management

Reference no: EM131905214

1) A proposed new investment has projected sales of $840,000. Variable costs are 55 percent of sales, and fixed costs are $173,000; depreciation is $74,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?

Sales $

Variable costs

Fixed costs

Depreciation

EBT $

Taxes Net income $

2) Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.73 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,090,000 in annual sales, with costs of $785,000.

The project requires an initial investment in net working capital of $310,000, and the fixed asset will have a market value of $215,000 at the end of the project.

If the tax rate is 30 percent, what is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.)

Years	Cash Flow
Year 0	$
Year 1	$
Year 2	$
Year 3	$

If the required return is 13 percent, what is the project's NPV?

3) Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $244,000, has a four-year life, and requires $76,000 in pretax annual operating costs.

System B costs $342,000, has a six-year life, and requires $70,000 in pretax annual operating costs. Suppose LISC always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 35 percent and the discount rate is 10 percent.

Calculate the EAC for both conveyor belt systems. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Reference no: EM131905214

Questions Cloud

How is the sales budget prepared : Why is its accuracy so important? Consider this in the context of the rest of master budget schedules and provide some substantive comments.

Determine dividend equivalency : A redemption is treated as payment in exchange for the shareholder's stock when it is not essentially equivalent to a dividend.

How many movies had the smallest count of four : How many movies had the smallest count of 4? Which movie had the highest dollar amount in both domestic and weekend?

What is the probability the sum is even or exactly divisibl : What is the probability the sum is less than 4 or greater than 9 (decimal 2places) and what are the odds? (Fraction)

Calculate the projected net income : A proposed new investment has projected sales of $840,000. Variable costs are 55 percent of sales, and fixed costs are $173,000;

What is the cost of preferred stock capital for ford : Preferred stock of Ford Motors pays a dividend of $5 each year and trades at a price of $30. What is the cost of preferred stock capital for Ford?

How much data is in the first segment : How much data is in the first segment? In the acknowledgement that Host B sends back to Host A, what will be the acknowledgement number?

What type of plan does a property manager implement : What type of plan does a property manager implement to manage renters who do NOT pay their rent in a timely way?

Compute the future dollar costs of meeting this obligation : Compute the future dollar costs of meeting this obligation using the money market hedge and the forward hedges.

User Account

All Pages