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bulgar [2K]
2 years ago
5

Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has

collected the following information on the project: Sales revenues $20 million Operating costs (excluding depreciation) 14 million Depreciation 4 million Interest expense 4 million The company has a 40% tax rate, and its WACC is 13%. Write out your answers completely. For example, 13 million should be entered as 13,000,000. What is the project's cash flow for the first year (t = 1)? Round your answer to the nearest dollar. $ If this project would cannibalize other projects by $2 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar. The firm's project's cash flow would now be $ . Ignore part b. If the tax rate dropped to 35%, how would that change your answer to part a? Round your answer to the nearest dollar. The firm's project's cash flow would by $
Business
1 answer:
Andrew [12]2 years ago
5 0

Answer:

(i) $5,200,000

(ii) $4,000,000

(iii) $5,300,000

Explanation:

(a) Profits before tax:

= Sales - costs - Depreciation

= $20 - $14 - $4

= $2 million

Net operating income = Profits before tax - Tax @40%

                                     = $2,000,000 - $800,000

                                     = $1,200,000

Project's cash flow for the first year:

= Net operating income + Depreciation

= $1,200,000 + $4,000,000

= $5,200,000

(b) Profits before tax:

= Sales - costs - Depreciation

= $20 - $14 - $4

= $2 million

Operating cash flows year:

= Profits before tax - Cannibalize effect + Depreciation

= $2,000,000 - $2,000,000 + $4,000,000

= $4,000,000

(c) Profits before tax:

= Sales - costs - Depreciation

= $20 - $14 - $4

= $2 million

Net operating income = Profits before tax - Tax @35%

                                     = $2,000,000 - $700,000

                                     = $1,300,000

Operating cash flows year:

= Net operating income + Depreciation

= $1,300,000 + $4,000,000

= $5,300,000

Operating cash flows will increase by $100,000.

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Tulip Corporation purchased equipment for $ 60 comma 000 on January​ 1, 2017. On December​ 31, 2019, the equipment was sold for
Mashcka [7]

Answer:

The sell will generate a loss of $6,000.

Explanation:

Please find the below for detailed calculations and explanations:

- The equipment's net value at the time of disposal is equal to: Book value of the equipment - The accumulated depreciation of the equipment = 60,000 - 28,000 = $32,000;

- The gain/(loss) on the disposal of equipment is equal to: Sell price of the equipment - The equipment's net value at the time of disposal = 26,000 - 32,000 = $(6,000)

Thus, Tulip Corporation's disposal of the equipment at Dec 31st 2019 makes a loss of $6,000.

8 0
3 years ago
Petra, Inc. has collected the following data.​ (There are no beginning​ inventories.): Units produced 580 units Units sold 580 u
Debora [2.8K]

Answer:

Operating income is $28,197.2

Explanation:

In order to calculate operating income, first we have to calculate total product cost per unit which is calculated as shown below:

Direct material per unit = $30

Direct labor = $35

Variable manufacturing overhead per unit = $10

Fixed manufacturing overhead per unit = 23,000 ÷ 580 = $39.66 per unit

Product cost per unit = 30 + 35 + 10 + 39.66 = $114.66

Now compute operating income as shown below:

Total sales = Per unit sales price × Units sold

                  = $230 × 580

                  = $133,400

Cost of goods sold = Units produced × product cost per unit

                                = 580 × 114.66

                                = $66,502.8

Gross profit = Sales - COGS

                    = 113,400 - 66,502.8

                    = $46,897.2

Fixed selling and administrative cost = $10,000

Variable selling and administrative cost = 15 × 580 = $8,700

Total selling and administrative cost = 10,000 + 8,700 = $18,700

Operating income = Gross profit - total selling and administrative cost

                               = $46,897.2 - 18,700

                               = $28,197.20

7 0
3 years ago
Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,
maxonik [38]

Find the given attachment

8 0
3 years ago
In the month of November, Carla Vista Co. Inc. wrote checks in the amount of $9,565. In December, checks in the amount of $11,46
liberstina [14]

Checks written in November $9,750

Less: Checks paid by bank in November $8,800

Checks outstanding at the end of November $950

Add: Checks written in December $11,762

Less: Checks paid by bank in December 10,889

Checks outstanding at the end of December $1,823

hope this helps!

- a random freshman

7 0
3 years ago
Pls choose A,B,C, or D!!
Artemon [7]

Answer:

a

Explanation:

6 0
2 years ago
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