The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 23 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income $ Year 1 Year O 42,000 480 Year 1 Year 2 $21,500 $ 4,500 10,500 530 Year 2 Year 3 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 3 Year 4 22,000 22,500, $19,500 4,600 4,700 3,900 10,500 10,500 580 10,500 480 ? $ Year 4
The Fleming Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 23 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income $ Year 1 Year O 42,000 480 Year 1 Year 2 $21,500 $ 4,500 10,500 530 Year 2 Year 3 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 3 Year 4 22,000 22,500, $19,500 4,600 4,700 3,900 10,500 10,500 580 10,500 480 ? $ Year 4
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The Fleming Manufacturing Company is considering a new investment. Financial
projections for the investment are tabulated below. The corporate tax rate is 23 percent.
Assume all sales revenue is received in cash, all operating costs and income taxes are
paid in cash, and all cash flows occur at the end of the year. All net working capital is
recovered at the end of the project.
Investment
Sales revenue
Operating costs
Depreciation
Net working capital spending
Net income
$
Year 1
Year O
42,000
480
Year 1 Year 2 Year 3
Year 2
22,500,
$21,500 $ 22,000$
4,500 4,600 4,700
10,500 10,500 10,500
530 580
480
a. Compute the incremental net income of the investment for each year. (Do not round
intermediate calculations.)
Year 3
Year 4
Year 4
$19,500
3,900
10,500
?
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