Answer:
At the end of year 4 (one year before the first cash flow)
Explanation:
According to the present value of perpetuity concept here we divided the predicted cash flows by the rate of that period by calculating this it provides the present value that is prior to the cash flow now if we want for more years so we should have to discount over that time period
Since in the given situation the starting of the cash flows is from the ending of year 5 therefore the timeline would be at the closing of year 4 i..e one year prior to the first cash flow
Addition to Retained Earnings will be the amount will be Net Income as calculated using the above information:
Net income will be calculated as below:
Sales...........................................................$680000
Less: Cost of Sales.................................$342000
Less: Depreciation..................................$86000
Less: Interest Expense.........................$53000
Earnings Before Tax...............................$199000
Less [email protected] 23%.........................................$45770
Net Income..............................................$153230
Thus Income of $153230 will be added to Retained earnings and Cash dividend of $40000 will be reduced from therein.
Answer:
$6400
Explanation:
Working capital is the net of current asset and current liabilities. it is a financial measure that gives insight into how liquid a company is considering that it shows whether or not the current assets can be used to settle the current obligations or liabilities of the company adequately.
The change in property, plant, and equipment of $48,000 is not an element of working capital, Hence change in working capital
= $8700 - $2300
= $6400
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True.
I hope this helps! :)
