The owner of a bicycle repair shop forecasts revenues of $180,000 a year. Variable costs will be $55,000, and rental costs for the shop are $35,000 a year. Depreciation on the repair tools will be $15,000 e. Prepare an income statement for the shop based on these estimates. The tax rate is 20% INCOME STATEMENT b. Calculate the operating cash flow for the repair shop using the three methods given below Now calculate the operating cash flow

The owner of a bicycle repair shop forecasts revenues of $180,000 a year. Variable costs will be $55,000, and rental costs for the shop are $35,000 a year. Depreciation on the repair tools will be $15,000 e. Prepare an income statement for the shop based on these estimates. The tax rate is 20% INCOME STATEMENT b. Calculate the operating cash flow for the repair shop using the three methods given below Now calculate the operating cash flow

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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The owner of a bicycle repair shop forecasts revenues of $240,000 a year. Variable costs will be $70,000, and rental costs for the shop are $50,000 a year. Depreciation on the repair tools will be $30,000. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $32,000 and will be depreciated straight- line over 3 years. It will be sold for scrap metal after 5 years for $8,000. The grill will have no effect on revenues but will save Johnny's $16,000 in energy expenses. The tax rate is 30%. Required: a. What are the operating cash flows in each year? b. What are the total cash flows in each year? c. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? Complete this question by entering your answers in the tabs below. Required A Required B Required C What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year 1 2 3 Operating Cash Flows
1. The manager in a canned food processing plant is trying to decide between two labeling machines. Assume an interest rate of 6%. Use annual cash flow analysis to determine which machine should be chosen. First cost Maintenance and operating costs Annual benefit Salvage value Useful life, in years Machine A $15,000 1,600 8,000 3,000 6 Machine B $25,000 400 13,000 6,000 10
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
A store will cost $750,000 to open. Variable costs will be 38% of sales and fixed costs are $250,000 per year. The investment costs will be depreciated straight-line over the 19 year life of the store to a salvage value of zero. The opportunity cost of capital is 11% and the tax rate is 25%. Find the operating cash flow each year if sales revenue is $750,000 per year. Enter your response below. Correct response: 171, 118.42+ - 10Using an operating cash flow of 171, 118.42, calculate the Net Present Value. Should the store be opened? Enter your response for net present value below. 591, 447.64 Correct response: 591, 447.65 + 100 Find the net present value break - even level of sales revenue Enter your response below.
You have a chance to invest in a shopping center. The total investment for the purchase of the land and construction of the center is $10,000,000 today. You have calculated the yearly net after tax cash flows from operations as follows: Year 1: $1,500,000 Year 2: 2,000,000 Year 3: 2,250,000 Year 4: 2,500,000 Year 5: 2,750,000 At the end of year 5 you will sell the shopping center for $18,000,000 after taxes. Required: |+ Use the provided Excel spreadsheet to calculate the present value of all the operating after-tax cash flows and the total cash flows for the project assuming you require an 20% R.O.I. Use the attached "PRESENT VALUE TABLE" for your calculations:
The owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will be $59.000, and rental costs for the shop are $39.000 a year. Depreciation on the repair tools will be $19.000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20% Calculate the operating cash flow for the repair shop using the three methods given below Now calculate the operating cash flow 1. Dollars in minus dollars out 2. Adjusted accounting profits, in 3.Add back depreciation tax shield

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