Question
In: Finance
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?
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.)
Calculate the incremental earnings of this project below: (Round to one decimal place.)
|
Incremental Earnings Forecast (millions) |
Year 1 |
|
|
Sales |
$ |
|
|
Operating Expenses |
$ |
|
|
Depreciation |
$ |
|
|
EBIT |
$ |
|
|
Income tax at 35% |
$ |
|
|
Unlevered Net Income |
$ |
Solutions
jeff jeffy answered 2 hours agoRelated 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 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?
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
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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
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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?...
Initial Investment: $1,000,000 WACC: 10% Revenue: 850,000 COGS: $540,000 Operating Expenses: $50,000 Depreciation Expense: $125,000 Tax...
Initial Investment: $1,000,000
WACC: 10%
Revenue: 850,000
COGS: $540,000
Operating Expenses: $50,000
Depreciation Expense: $125,000
Tax Expense: $28,350
What is the cumulative Net Cash Flow for the first year?
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