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Anton [14]
2 years ago
8

Coache Corporation is considering a capital budgeting project that would require an investment of $120,000 in equipment with a 4

year useful life and zero salvage value. The annual incremental sales would be $310,000 and the annual incremental cash operating expenses would be $230,000. In addition, there would be a one-time renovation expense in year 3 of $30,000. The company's income tax rate is 30%. The company uses straight-line depreciation on all equipment. The total cash flow net of income taxes in year 3 is:
a. $44,000
b. $35,000
c. $65,000
d. $50,000
Business
1 answer:
Kaylis [27]2 years ago
6 0

Answer:

a. $44,000

Explanation:

The computation of the total cash flow net of income taxes in year 3 is shown below:

= Incremental sales - annual incremental cash operating expenses - one-time renovation expense - depreciation expense - income tax expense + depreciation expense

= $310,000 - $230,000 - $30,000 - $30,000 - $6,000 + $30,000

= $44,000

Since depreciation is a non-cash expense so it would be added back to the computation part

The depreciation expense would be

= (Original cost - residual value) ÷ (useful life)

= ($120,000 - $0) ÷ (4 years)

= ($120,000) ÷ (4 years)  

= $30,000

And, the income tax expense would be

= (Incremental sales - annual incremental cash operating expenses - one-time renovation expense - depreciation expense) × tax rate

= ($310,000 - $230,000 - $30,000 - $30,000) × 30%

= $20,000  × 30%

= $6,000

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you are writing a long, complex document in which you need to explain a series of events that led to a problem, evaluate several
hjlf

Answer:

Hi

Explanation:

What organizational pattern would probably be most effective for arranging the main points of a speech with the specific purpose "To inform my audience about three major ways to block junk mail from their e-mail system"? chronological order.

7 0
2 years ago
Sand, Inc. has outstanding $5,000,000, 10%, 20-year bonds. The bonds are callable at 104 on any interest date. The bonds were is
Ray Of Light [21]

Answer: B) A loss of $200,000 on its income statement in the year the bonds are called.

Explanation:

The bonds were issued at Par. This means they were issued at 100 of par.

The bonds are now trading at 104 of par.

If Sand Inc calls the bonds then they will make a profit (loss) of,

= 5,000,000 * 104/100

= $5,200,000

Therefore their Profit (loss) will be the bond at par minus the Calling price

= 5,000,000 - 5,200,000

= -$200,000

That means they make a loss of $200,000 in the year the bonds are called.

If you need any clarification do react or comment.

6 0
3 years ago
As winner of a breakfast cereal competition, you can choose one of the following prizes: a. $180,000 at the end of five years. b
Stolb23 [73]

Answer:

i. Discounted cashflow equations.

a.  $180,000 at the end of five years.

This is a lump sum present value/ discounted cashflow which can be calculated as;

Formula = 180,000 / ( 1 + r)^n

= 180,000/ ( 1 + 12%)^5

= $102,136.83

b. $11,400 a year forever

This is a perpetuity. The present value/ discounted cashflow of a perpetuity is calculated as;

Formula = Amount/rate

= 11,400/12%

= $95,000

c. $19,000 for each of 10 years.

This is an annuity. The formula for calculating the Present value/ discounted cashflow of an annuity is;

Formula = Annuity * [\frac{( 1 - (1 + i)^{-n} )}{i} ] where <em>i </em>is interest rate and <em>n</em> is number of periods

= 19,000 * [\frac{( 1 - (1 + 0.12)^{-10} )}{0.12} ]

= $107,354.24

d. $6,500 next year and increasing thereafter by 5% a year forever.

This is a growing perpetuity. The present value/ discounted cashflow formula is;

= Amount / ( discount rate - growth rate)

= 6,500 / ( 12% - 5%)

= $92,857.14

ii. Choose <u>$19,000 for each of 10 years</u> as it has the highest present value.

7 0
3 years ago
Jack Spratt is the production manager for a manufacturing firm that produces wizzy-gadgets and other items. The annual demand fo
Assoli18 [71]

Answer:

200 units      

Explanation:

For computing the number of units produced each time we need to applied the economic order quantity formula which is shown below:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

where,

Annual demand is 1,600 units

Ordering cost per order is $25

And, the carrying cost or holding cost per unit per year is $2

Now placing these values to the above formula

So, the economic order quantity is

= \sqrt{\frac{2\times \text{1,600}\times \text{\$25}}{\text{\$2}}}

= 200 units          

8 0
3 years ago
Carla Vista Electronics reported the following information at its annual meetings: The company had cash and marketable securitie
adell [148]

Answer:

$6,718,553

Explanation:

Working capital is the net of current assets (Inventory, account receivables, Cash etc) and current liabilities (Accounts payable, short term notes payable etc).

It is a financial measure that gives insight into how liquid a company is. .

As such, the company's working capital

= $1,235,455 - $4,159,357 + $7,184,800 + $3,472,300 - $1,136,100 + $121,455

( the signs are positive for assets and negative for liabilities)

= $6,718,553

6 0
3 years ago
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