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coldgirl [10]
3 years ago
5

Elmdale Enterprises is deciding whether to expand its production facilities. Although​ long-term cash flows are difficult to​ es

timate, management has projected the following cash flows for the first two years​ (in millions of​ dollars): Year 1 Year 2 Revenues 121.6 169.3 COGS and Operating Expenses​ (other than​ depreciation) 37.7 50.4 Depreciation 26.6 28.2 Increase in Net Working Capital 3.4 7.4 Capital Expenditures 30.8 40.9 Marginal Corporate Tax Rate 35​% 35​% a. What are the incremental earnings for this project for years 1 and​ 2
Business
1 answer:
Hunter-Best [27]3 years ago
3 0

Answer:

Year 1

Incremental earnings = EBIT * ( 1 - Tax)

EBIT = Revenue - Operating expense - Depreciation

= 121.6 - 37.7 - 26.6

= $57.3 million

Incremental earnings = 57.3 * ( 1 - 35%)

= $37.245 million

Year 2

EBIT = 169.3 - 50.4 - 28.2

= $90.7 million

Incremetal earnings = 90.7 * (1 - 35%)

= $58.955 million

You might be interested in
Contribution Margin and Contribution Margin Ratio
emmainna [20.7K]

Answer:

See below

Explanation:

Variable food and packaging = $6,129.7

Variable payroll = $4,756.0

Variable general, selling and administrative expenses = 40% × $2,487.9 = $995.16

Fixed general, selling and administrative expenses = 60% × $2,487.9 = $1,492.74

Fixed occupancy = $4,402.6

Total fixed cost = $1,492.84 + $4,402.6 = $5,895.34

Total variable cost = Variable food and packaging + Variable payroll + Variable general, selling and administrative expenses

= $6,129.7 + $4,756 + $995.16

= $11,880.86

a. McDonald's contribution margin

= Sales - Variable cost

= $18,169.3 - $11,880.86

= $6,288.44

b. McDonald's contribution margin

= Contribution margin / Sales

= $6,288.44 / $18,169.3

= 34.61%

c. Increase in operating income

= $500 million × 34.71

= $173,050,000

7 0
3 years ago
Regarding the statute of limitations on additional assessments of tax by the IRS, select the applicable date in each of the foll
-Dominant- [34]

Answer:

A) The income tax return for 2018 was filed on March 3, 2019. The three-year statute of limitations will begin to run on:

  • April 16, 2019 (the next day after the tax deadline)

B) The income tax return for 2018 was filed on August 13, 2019. The statute of limitations will begin to run on:

  • August 13, 2019 (the same day the taxes were filed)

C) The income tax return for 2018 was prepared on March 31, 2019, but was never filed. Through some misunderstanding between the preparer and the taxpayer, each expected the other to file the return. The statute of limitations:

  • If the taxes were not filed, then the statute of limitations cannot begin to run.

D) The income tax return for 2018 was never filed because the taxpayer thought no additional tax was due. The statute of limitations:

  • If the taxes were not filed, then the statute of limitations cannot begin to run.

3 0
4 years ago
Financial Statements and Ratios-Bike-With-Us Corporation, a specialty bicycle parts replacement venture, was started last year b
valentinak56 [21]

Answer:

B.

Current Ratio 3.86

Quick Ratio 1.48

NWC to total assets ratio 0.458

C. Debt to asset 0.452

Debt to equity 1.18

Interest Coverage 6 times

D. Net profit margin 5.8%

sales to total asset 2.48 times

return on assets 14.5%

E. Equity multiplier 2.18 times

Explanation:

<u>A.</u>

<u>Income Statement :</u>

Sales $325,000

Operating costs $285,000

Gross profit $40,000

Less Expense :

depreciation $10,000

Earning before Interest and Tax $30,000

Interest Expense $5,000

Earning after Tax $25,000

Tax expense $6,000

Net Income $19,000

<u>Balance Sheet:</u>

Assets:

Cash $1,000

Receivables $30,000

Inventories $50,000

Current Assets $81,000

Fixed Assets $50,000

Total Assets $131,000

Equity:

Stockholder's Equity $60,000

Liabilities:

Payables $11,000

Accruals $10,000

Current Liabilities $21,000

Long term Loan $50,000

Total equity and liabilities $131,000

3 0
3 years ago
A company that operates a frequent flyer club at an airport incurs the following operating costs: receptionist and supervisory s
lakkis [162]

Answer:

Terminal depreciation based on square footage ( A )

Explanation:

The operating costs that the company will classify as unavoidable would be the Terminal depreciation based on square footage. this is because the terminal depreciation of the club is unavoidable whether the club is closed or opened. because the terminal depreciation is based on square footage and the coat of operating that space either as a club or expanding the seating area is unavoidable for the company,

5 0
3 years ago
A hypothetical interest rate whose only function is to compensate lenders for the opportunities they forgo by not having access
aev [14]

An interest rate that is hypothetical and has the singular function of showing the returns that lenders forego when they don't have access to the loaned funds is pure rate of interest.

<h3>What is the pure rate of interest?</h3><h3 />

The pure interest rate is a rate that is found in perfectly competitive markets and relates to foregone profit.

This rate might be hypothetical but it functions to show how much returns those who loan money would gain if they had access to the money they loaned to a loanee.

This rate is impractical however because it assumes a world where there is no risk which is simply not possible.

In conclusion, this is the pure rate of interest.

Find out more on the pure rate of interest at brainly.com/question/20630240

#SPJ1

6 0
2 years ago
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