Need help with this question The forecast for your division for next year is sales revenue of $250,000, butinterest expense will be $9,000. Operating expenses will be $195,000 invariable costs and $35,000 in fixed costs. Depreciation expenses will be$18,000.If the applicable tax rate is 39%, what is the forecast OCF for next year?

Step 1: Calculate Earnings Before Interest and Taxes (EBIT):• Subtract Operating Expenses and…

Answered: The forecast for your division for next…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

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Hebner Housing Corporation has forecast the following numbers for this upcoming year: Sales = $1,000,000. Cost of goods sold = 600,000. Interest expense = 100,000. Net income = 180,000.The company is in the 40 percent tax bracket. Its cost of goods sold always represents 60 percent of its sales. That is, if the company’s sales were to increase to $1.5 million, its cost of goods sold would increase to $900,000. The company’s CEO is unhappy with the forecast and wants the firm to achieve a net income equal to $240,000. In order to achieve this level of net income, what level of sales will the company have to achieve? Assume that Hebner’s interest expense remains constant.
A project currently generates sales of $11.6 million, variable costs equal to 50% of sales, and fixed costs of $3.8 million. The firm's tax rate is 30%. a. What are the effects on the after-tax profits and cash flow, if sales increase from $11.6 million to $13.8 million. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.) After-tax profit (Click to select) million, million. by $ Cash flow (Click to select) v by $ b. What are the effects on the after-tax profits and cash flow, if variable costs increase to 55% of sales. (Input all amounts as positive values. Do not round intermediate calculations. Enter your answers in millions rounded to 3 decimal places.) After-tax profit| (Click to select) v by $ Cash flow (Click to select) million. v by $ million. %24
The XYZ Corporation expects to have sales of $15 million this year. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to amount to $1 million. XYZ is using $5 million debt at 10%. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. XYZ's federalolus - state tax rate is 30%. What is XYZ's expected cash flow from operations? (Assume no other changes occurred.)
A new investment has projected sales of $450,000. Costs of goods sold are 40% of sales, and fixed costs are $100,000. The depreciation expense is $75,000. Assume a tax rate of 40%. What is the (after-tax) net income? Note: please write down the answer to this question, which is needed for the next question. $57,000 $95,000 $38,000 $61,750
A proposed new investment has projected sales of $710,000. Variable costs are 38 percent of sales, and fixed costs are $213,000; depreciation is $98,000. Assume a tax rate of 25 percent. What is the projected net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Net income
Your firm is considering a project that would cost $325,000 and be depreciated straight-line over four years to $0 book value. Your firm estimates $15,000 in yearly after-tax operating costs. The required return is 12.0 percent, and the firm pays a 21.0 percent tax rate. What is the equivalent annual cost of this project?
A new firm expects to generate Sales of $124,900. POINT BLANK has variable costs of $77,500, and fixed costs of $18,000. The per-year depreciation is $4,300 and the tax rate is 35 percent. What is the annual operating cash flow?
What is the NPV of a 6-year project that costs $100,000, has annual revenues of $50,000 and costs of $15,000? Assume the investment can be depreciated for tax purposes straight-line over 6 years, the corporate tax rate is 35%, and the discount rate is 14%.
Webster world has sales of $13,800, costs of $5800, depreciation expense of $1100, and interest expense of $700. What is the OCF if the tax rate is 23 percent?
A firm will report annual Net Income of $50 and depreciation expense of $20 forever in the future. With a tax rate of 30%, how much is the present value of all future “tax shields”? Assume r = 4%.
You are considering purchasing a CNCmachine which costs $150,000. This machine willhave an estimated service life of 10 years with a netafter-tax salvage value of $15,000. Its annual aftertax operating and maintenance costs are estimatedto be $50,000. To expect an 18% rate of return oninvestment, what would be the required minimumannual after-tax revenues?
A project has fixed costs of $2,100 per year, depreciation charges of $600 a year, annual revenue of $10,800, and variable costs equal to two-thirds of revenues. a. If sales increase by 20%, what will be the percentage increase in pretax profits? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) What is the Pretax profits increase (%)? b. What is the degree of operating leverage of this project? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What is the degree of operation leverage?

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