You work for Atlas Industries, and you need to estimate the Year 1 operating cash flow for a new production line. The following data is available: Sales revenue: $25,000 ⚫ Depreciation expense: $6,000 Other operating costs: $10,000 Tax rate: 25% What is the Year 1 operating cash flow? a) $10,250 b) $11,250 c) $12,750 d) $13,250

You work for Atlas Industries, and you need to estimate the Year 1 operating cash flow for a new production line. The following data is available: Sales revenue: $25,000 ⚫ Depreciation expense: $6,000 Other operating costs: $10,000 Tax rate: 25% What is the Year 1 operating cash flow? a) $10,250 b) $11,250 c) $12,750 d) $13,250

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 6MAD: Assume Home Garden Inc. in MAD 26-5 assigns the following probabilities to the estimated...

See similar textbooks

Similar questions

The owner of a bicycle repair shop forecasts revenues of $220,000 a year. Variable costs will be $65,000, and rental costs for the shop are $45,000 a year. Depreciation on the repair tools will be $25,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Depreciation Pretax profit INCOME STATEMENT 0 $ 0 b. Calculate the operating cash flow for the repair shop using the three methods given below. i. Dollars in minus dollars out. ii. Adjusted accounting profits. iii. Add back depreciation tax shield. Methods of Calculation i. Dollars in Minus Dollars Out ii. Adjusted Accounting profits iii. Add back depreciation tax shield Operating Cash Flow
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
The following details are provided by a manufacturing company: Investment Useful life Estimated annual net cash inflows for first year Estimated annual net cash inflows for second year Estimated annual net cash inflows for next ten years Residual value Product line $1,170,000 12 years $500,000 $360,000 $360,000 $50,000 Depreciation method Straight-line 14% Required rate of return Calculate the payback period for the investment. (Round your answer to two decimal places.) OA. 2.34 years OB. 2.77 years OC. 2.86 years OD. 2.94 years
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Varlable 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. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. INCOME STATEMENT Depreciation Pretax profit Rental costs Revenue Taxes b. Calculate the operating cash flow for the repair shop using the three methods given below: 1. Dollars in minus dollars out. II. Adjusted accounting profits. III. Add back depreciation tax shield. Methods of Calculation i. Dollars in minus dollars out ii. Adjusted Accounting profits iii. Add back depreciation tax shield Operating Cash flow
The owner of a bicycle repair shop forecasts revenues of $172,000 a year. Variable costs will be $53,000, and rental costs for the shop are $33,000 a year. Depreciation on the repair tools will be $13,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield
The owner of a bicycle repair shop forecasts revenues of $200,000 a year. Variable costs will be $60,000, and rental costs for the shop are $40,000 a year. Depreciation on the repair tools will be $20,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
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. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. 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 company is considering a $184,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Net Cash Flow (a) Compute the net present value of this investment. (b) Should the machinery be purchased? Required A Required B Year 1 $11,000 Year Year 2 $31,000 Complete this question by entering your answers in the tabs below. Year 1 Year 2 Year 3 Net Cash Flows Year 3 $61,000 Compute the net present value of this investment. (Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.) Present Value Factor Year 4 $46,000 Present Value of Net Cash Flows Year 5 $123,000
Nikul
A factory manager is considering the purchase of one of the following two production equipment. Cash flow estimates for equipment A are in year-zoro dollars while those of equipment B are in actual dollars Equipment A (year-zero S) Equipment B (actual $) $1,200 Initial investment $9,500 Net annual revenue $3.000 $4,000 $0 Market value at end of useful life Useful ife, years 11 11 The manager uses a market interest rate of 12% per year. If inflation rate is expected to average 5.66% per year over the next several years, determine the PW of each equipment. 1. The PW of Equipment A is OA. S14,161 OB. $14,578 OC. $12,500 OD. $0,313 2. The PW of Equipment B is O A. $20,347 OB. S15,200 OC. $20,903 OD. $12,651
Subject:- finance
Use AstroTurf Company's income statement below to answer the following questions. Operating costs (excl. depreciations & amortization): $4.5mDepreciation and amortization: $1.5mInterest: $0.7mNet Income: $2.8mTax Rate: 35%1. Calculate AstroTurf’s EBITDA. Input your final answer here : Explanation: Provide a step-by-step explanation for how you arrived at your above solution as though you were teaching a student to solve this type of problem. Provide a clear explanation, showing any steps or processes used to reach the answer. What level of sales would generate a net income of $4.2m for the following year, knowing that operating costs (excl. depreciation and amortization) will increase by 7.5%, and given a 35% tax rate. Explanation: Provide a step-by-step explanation for how you arrived at your solution as though you were teaching a student to solve this type of problem.