The following additional information is also available: 1 Operating profit is expected to be 15 per cent of sales revenue throughout the four-year period. 2 The company has an £800,000 10 per cent bank loan, half of which is redeemable at the end of Year 3. 3 The tax rate is expected to be 20 per cent throughout the four-year period. Tax is paid in the year following the year in which the relevant profits are made. 4 An initial investment in net working capital of £140,000 is required. Thereafter, investment in net working capital is expected to represent 10 per cent of sales revenue for the relevant year. 5 Depreciation of £70,000 per year must be charged for the non- current assets currently held. 6 Equipment costing £100,000 will be acquired at the beginning of Year 4. This will be depreciated at the rate of 10 per cent per year. 7 Dividends equal to 50 per cent of the profit for the year will be announced each year. These dividends are paid in the year following the period to which they relate. 8 The business has a current cash balance of f125 000

The following additional information is also available: 1 Operating profit is expected to be 15 per cent of sales revenue throughout the four-year period. 2 The company has an £800,000 10 per cent bank loan, half of which is redeemable at the end of Year 3. 3 The tax rate is expected to be 20 per cent throughout the four-year period. Tax is paid in the year following the year in which the relevant profits are made. 4 An initial investment in net working capital of £140,000 is required. Thereafter, investment in net working capital is expected to represent 10 per cent of sales revenue for the relevant year. 5 Depreciation of £70,000 per year must be charged for the non- current assets currently held. 6 Equipment costing £100,000 will be acquired at the beginning of Year 4. This will be depreciated at the rate of 10 per cent per year. 7 Dividends equal to 50 per cent of the profit for the year will be announced each year. These dividends are paid in the year following the period to which they relate. 8 The business has a current cash balance of f125 000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

See similar textbooks

Similar questions

You own a company. This company’s projected revenue is $30,000 for year 1, $31,000 for year 2, and $32,000 for year 3. From the 4th year onwards, revenue is expected to be 5% higher than the previous year. Assume the appropriate nominal discount rate is 8%, and all revenue is collected at the end of each year.Determine the present value of your sales revenue for the first 15 years, round to 2 decimal places.
(a) next quarter. The following forecast sales for the year of 2021: Sakura Group has been engaged in the process of forecasting its financing needs over the Month May Sales RM775,000 June July August September October RM970,000 RM880,000 RM1,375,000 RM1,633,000 RM1,890,000 The company's sales of 40 percent is collected in the month of sales and the remaining balance will be collected in the following months after sales. Sakura's purchase raw material equal to 82 percent of sales and its makes purchases a month in advance of sales. 60 percent of purchases are cash, and 35 percent is paid in the following month and the remaining is never collected. Additional information: (1i) Interest income of RM10,500 on marketable securities will be received in August. (ii) Other income of RM1,650 will receive every end of quarter. (iii) The firm paid worker wages based on 5 percent of sales in the month. (iv) The utilities is expected at 2 percent of sales in the month of the sales. (v) Monthly…
the tax office allow industrail vehicles to be depreciated at 7.5% every 6 month. what will be the value in 2 years if it currently worth 240,000
A company borrowed at 3.27% compounded annually to purchase equipment, agreeing to make payments of $2,970 at the end of every three months for 15 payments. (a) What is the equivalent cash price of the equipment? (b) How much will be owed at the end of two years? (c) How much of the principal will be repaid within the first two years? (d) How much interest is paid during the first two years?
A corporation deposits $20 million in a money market account for 1 year. What will be the difference in the total amount accumulated at the end of the year at 18% per year compounded monthly versus 18% per year simple interest?
A company borrowed at 4.38% compounded semi-annually to purchase equipment, agreeing to make payments of $2,760 at the end of every three months for 16 payments. (a) What is the equivalent cash price of the equipment? (b) How much will be owed at the end of two years? (c) How much of the principal will be repaid within the first two years? (d) How much interest is paid during the first two years?
A man invested P110,000 for 31 days. The net interest after deducting 20%withholding tax is P890.36. Find the rate of return annually.· A. 11.50 %· B. 11.75 %· C. 11.95 %· D. 12.32 %
A lot purchased for $4,500 is held for five years and sold for $13,500. The average annual property tax is $45 and may be accounted for at an interest rate of 12%. The income tax rate on the long term capital gain is 15% of the gain. What is the rate of return on the investment if the allowance for inflation is treated at an average annual rate of 7%?
A business borrows today $100 million. The loan is paid back in equal semi-annual payments over 10 years, first payment in 6 months. Assuming 8.0% interest rate, calculate: a. The semi-annual payment b. Interest charged in the first full year. (Two payments).
A loan of $245,000 is to be repaid in equal quarterly payments over a period of 6 years. If the interest rate is 12.5% compounded quarterly, what is the amount of unpaid principal at the beginning of the third year? a. $182,425 O b. $181,650 c. $143,920 O d. $144,864 O e. $234,594
General Accounting
Revenue from a sugar company was $21,000 in years 1 through 3 and then increased geometrically by 15% per year through year 7. Determine the equivalent annual income in years 1 through 7, using an interest rate of 10% per year.