Question

In: Finance

Year 1 Year 2 Revenues 120.8 150.6 COGS and Operating Expenses​ (other than​ depreciation) 46.1 54.5...

Year 1

Year 2

Revenues

120.8

150.6

COGS and Operating Expenses​ (other than​ depreciation)

46.1

54.5

Depreciation

24.9

32.9

Increase in Net Working Capital

2.8

8.2

Capital Expenditures

29.2

38.4

Marginal Corporate Tax Rate

35​%

35​%

a. What are the incremental earnings for this project for years 1 and​ 2?​ (Note: Assume any incremental cost of goods sold is included as part of operating​ expenses.)

b. What are the free cash flows for this project for years 1 and​ 2?

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Year 1 Year 2 Revenues 128.9 151.6 COGS and Operating Expenses (other than depreciation) 49.6 52.7...
Year 1 Year 2 Revenues 128.9 151.6 COGS and Operating Expenses (other than depreciation) 49.6 52.7 Depreciation 24.9 43.5 Increase in Net Working Capital 3.4 8.1 Capital Expenditures 27.3 43.2 Marginal Corporate Tax Rate 35% 35% a. What are the incremental earnings for this project for years 1 and​ 2?​ (Note: Assume any incremental cost of goods sold is included as part of operating​ expenses.) b. What are the free cash flows for this project for years 1 and​ 2?...
Year 1 Year 2 Revenues 126.1126.1 155.6155.6 COGS and Operating Expenses​ (other than​ depreciation) 36.236.2 57.157.1...
Year 1 Year 2 Revenues 126.1126.1 155.6155.6 COGS and Operating Expenses​ (other than​ depreciation) 36.236.2 57.157.1 Depreciation 28.128.1 39.139.1 Increase in Net Working Capital 2.32.3 8.68.6 Capital Expenditures 28.528.5 37.637.6 Marginal Corporate Tax Rate 3535​% 3535​% a. What are the incremental earnings for this project for years 1 and​ 2?​ (Note: Assume any incremental cost of goods sold is included as part of operating​ expenses.) b. What are the free cash flows for this project for years 1 and​ 2?...
Revenues −Manufacturing Expenses −Marketing Expenses −Depreciation Year 0 Years 1 to 10 3.9 −0.5 −0.15 −0.4...
Revenues −Manufacturing Expenses −Marketing Expenses −Depreciation Year 0 Years 1 to 10 3.9 −0.5 −0.15 −0.4 ​=EBIT −Taxes ​(40%) 2.85 −1.14 ​=Unlevered net income ​+Depreciation −Additions to Net Working Capital −Capital Expenditures −7 1.71 ​+0.4 −0.4 ​=Free Cash Flow 1.71 Panjandrum​ Industries, a manufacturer of industrial​ piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision​ (all...
1. XYZ Corp. expects the following revenues, cash expenses, and depreciation charges in the future: Year...
1. XYZ Corp. expects the following revenues, cash expenses, and depreciation charges in the future: Year 1 2 3 Revenues $89,000 $106,000 $145,000 Cost of goods sold $38,000 $ 49,000 $53,000 Selling expenses $11,000 $ 13,000 $14,000 O ther cash operating expenses $10,000 $ 11,000 $12,000 Depreciation $ 9,500 $ 13,500 $15,000 This business is in the 22 percent tax bracket. Please compute the after-tax cash flows from operations for this investment for each of the years. After-tax operating cash...
Champagne, Inc., had revenues of $14 million, cash operating expenses of $9.5 million, and depreciation and...
Champagne, Inc., had revenues of $14 million, cash operating expenses of $9.5 million, and depreciation and amortization of $1.6 million during 2018. The firm purchased $650,000 of equipment during the year while increasing its inventory by $450,000 (with no corresponding increase in current liabilities). The marginal tax rate for Champagne is 30 percent. What is Champagne's cash flow from operations for 2018? What is Champagne's free cash flow for 2018?
1. Calculate Revenues, COGS, Gross Profit and Gross Margin in year 2 based on the following:...
1. Calculate Revenues, COGS, Gross Profit and Gross Margin in year 2 based on the following: Yr. 1 Revenues 500 COGS 400 Gross Profit 100 Gross Margin 20% Sales rise 5%, 3% due to increase in volume and 2% due to increase in price. COGS is 80% variable. 2. What is the primary driver of sales growth for the following company? Explain. Assume COGS is 60% variable. Yr. 1 Yr. 2 Revenues 800    850 COGS 500 519 Gross Profit...
Revenues $300,000 Less operating expenses: Rent $169,000 Insurance 15,000 Depreciation 46,000 Maintenance 20,000 250,000 Net operating...
Revenues $300,000 Less operating expenses: Rent $169,000 Insurance 15,000 Depreciation 46,000 Maintenance 20,000 250,000 Net operating income $   50,000 1. A company has estimated the annual revenues and expenses for a project it is considering (listed above) that will cost a total of $500,000, have a ten-year useful life, and has a salvage value of $40,000. The company requires a payback period of 5 years or less. Using the information above, what is the expected annual cash flow for this...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds outstanding that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 21%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $725. By how much will the depreciation change cause the firm's net after-tax income and its...
Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and...
Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges, it had $5,000 of bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $540. By how much will net after-tax income change as a result of the change in depreciation?...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds outstanding that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 25%. This year’s data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $725. By how much will the depreciation change cause the firm’s net after-tax income to change?...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT