Plant Cost $3,000,000 year 0 Sales (units) 75,000 year 1 Selling Price $30 each Sales Growth 30.0% per year Variable Costs 45% of revenue SG&A 50% of revenue SG&A Declines 4% per year Depreciation 5 years, straight-line Tax Rate 38% How much revenue is there in year 2?

Plant Cost $3,000,000 year 0 Sales (units) 75,000 year 1 Selling Price $30 each Sales Growth 30.0% per year Variable Costs 45% of revenue SG&A 50% of revenue SG&A Declines 4% per year Depreciation 5 years, straight-line Tax Rate 38% How much revenue is there in year 2?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Plant Cost	$3,000,000	year 0
Sales (units)	75,000	year 1
Selling Price	$30	each
Sales Growth	30.0%	per year

Variable Costs	45%	of revenue
SG&A	50%	of revenue
SG&A Declines	4%	per year
Depreciation	5	years, straight-line
Tax Rate	38%

How much revenue is there in year 2?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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