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Galina-37 [17]
4 years ago
8

Continuing from Problem 1, at the end of the first year, Chemtec is expecting sales of $250 million and costs of $125 million. T

here are no more required investments in either net working capital or plant and equipment. However, the existing plant and equipment will experience \$50$50 million of depreciation. Assume that Chemtec's marginal tax rate on earnings is 35\5%. Assuming that all of these cash flow occur at the end of the first year, what is the first year's free cash flow
Business
1 answer:
Tanzania [10]4 years ago
3 0

Answer:

Free cash for first year is $98.75

Explanation:

Sales =                                  $250 million

Less: Costs =                        $125 million

Less: Depreciation =            <u>$50 million</u>

Earning before Tax =           $75 million

Less: Tax 35% (75 x 35%) = <u>$26.25 million</u>

Net Income =                        <u>$ 48.75 million</u>

Free cash flow = Net Income + Non cash Expenses - Increase in working capital - Capital Expenditure

Free cash flow = 48.75 million + 50 million - 0 - 0

Free cash flow = 98.75 million

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In the given scenario, Rembrandt Cosmetics accomplished its substitution primarily through strategic planning of equivalence.  

<h3>What is strategic planning?</h3>

When the differences between two different strategic plans are identical, with other things being constant, such a situation is called as a strategic planning of equivalence.

Hence, strategic planning holds true regarding the given situation.

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2 years ago
From 2006 to 2010, per capita real gross domestic product (GDP) in the Philippines grew an average of 3.16% per year. At that ra
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Answer:

years to double GDP  = 22.15   = 22 years

so here correct option is c. 22 years

Explanation:

given data

average growth rate  = 3.16% per year

Rule of 70

to find out

how many years will the Filipino economy double in size

solution

we know that according to Rule of 70

years to double GDP is express as

years to double GDP  = \frac{70}{growth\ rate}       ......................1

put here value of average growth rate in equation 1

years to double GDP  = \frac{70}{growth\ rate}

years to double GDP  = \frac{70}{3.16}

years to double GDP  = 22.15   = 22 years

so here correct option is c. 22 years

8 0
3 years ago
A firm is considering the purchase of a $500,000 machine for its business. The machine is expected to increase sales by $237,000
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Answer:

c. Reject the project because the NPV is negative $120,921

Explanation:

As we know that the depreciation is a non-cash expense so here we need to add the depreciation expense again

Now the cash inflow would be $100,000 each year i.e. for 5 years

And, the initial investment is $500,000

Now we have to use the formula of NPV in an excel by using the NPV function

=NPV(rate,Year1 to Year5 cashflows)-Year0 cashflow

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Therefore the correct option is c.

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To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors. They also want to avoid do
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Answer:

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Because Candance and Martha want to sell shares, they have to form a corporation, be it a C Corporation or an S Corporation, however, they also want to avoid double taxation, therefore, they have to form a C Corporation.

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Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for
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<h3>What is total revenue?</h3>
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