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Business Finance INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP

a) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To determine: The expected net income along with the expected net cash flows. Expected net income = $1,185,000 Net cash flows = $2,685,000 Income statement Particulars Amount $ Sales 12,000,000 Less: Cost (12,000,000 * 75%) 9,000,000 Less: Depreciation 1,500,000 Profit before tax 1,500,000 Less: Tax @21% 315,000 Profit after tax 1,185,000 Net cash flows = Profit after tax + Depreciation expense = 1,185,000 + $1,500,000 = $2,685,000 b) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To determine: The impact of depreciation expense on the profit and net cash flows. Expected net income = $0 Net cash flows =$3,000,000 Income statement Particulars Amount $ Sales 12,000,000 Less: Cost (12,000,000 * 75%) 9,000,000 Less: Depreciation 3,000,000 Profit before tax 0 Less: Tax @21% 0 Profit after tax 0 . Net cash flows = Profit after tax + Depreciation expense = $0 + $3,000,000 =$3,000,000 . c) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To determine: The impact of depreciation expense on the profit and net cash flows. Expected net income = $0 Net cash flows = $3,000,000 Income statement Particulars Amount $ Sales 12,000,000 Less: Cost (12,000,000 * 75%) 9,000,000 Less: Depreciation 750,000 Profit before tax 2,250,000 Less: Tax @21% 472,500 Profit after tax 1,777,500 Net cash flows = Profit after tax + Depreciation expense = $1,777,500 + $750,000 = $2,527,500 d) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To state: The opinion regarding the Congress to cause the depreciation expense to doubled or halved. Double depreciation expense Since there is an increase in the cash flow when the depreciation expense is double, hence I would prefer Congress to enforce the depreciation expense to double.

a) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To determine: The expected net income along with the expected net cash flows. Expected net income = $1,185,000 Net cash flows = $2,685,000 Income statement Particulars Amount $ Sales 12,000,000 Less: Cost (12,000,000 * 75%) 9,000,000 Less: Depreciation 1,500,000 Profit before tax 1,500,000 Less: Tax @21% 315,000 Profit after tax 1,185,000 Net cash flows = Profit after tax + Depreciation expense = 1,185,000 + $1,500,000 = $2,685,000 b) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To determine: The impact of depreciation expense on the profit and net cash flows. Expected net income = $0 Net cash flows =$3,000,000 Income statement Particulars Amount $ Sales 12,000,000 Less: Cost (12,000,000 * 75%) 9,000,000 Less: Depreciation 3,000,000 Profit before tax 0 Less: Tax @21% 0 Profit after tax 0 . Net cash flows = Profit after tax + Depreciation expense = $0 + $3,000,000 =$3,000,000 . c) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To determine: The impact of depreciation expense on the profit and net cash flows. Expected net income = $0 Net cash flows = $3,000,000 Income statement Particulars Amount $ Sales 12,000,000 Less: Cost (12,000,000 * 75%) 9,000,000 Less: Depreciation 750,000 Profit before tax 2,250,000 Less: Tax @21% 472,500 Profit after tax 1,777,500 Net cash flows = Profit after tax + Depreciation expense = $1,777,500 + $750,000 = $2,527,500 d) Introduction: In order to determine the net income, the business organizations are required to subtract the cost of goods sold, interest expenses, all other expenses (direct as well as indirect), and tax expenses . To state: The opinion regarding the Congress to cause the depreciation expense to doubled or halved. Double depreciation expense Since there is an increase in the cash flow when the depreciation expense is double, hence I would prefer Congress to enforce the depreciation expense to double.

INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP

INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP

14th Edition

ISBN: 9780357533611

Author: Brigham

Publisher: CENGAGE L

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Chapter 6, Problem 13P

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Chapter 6 Solutions

INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP

Ch. 6 - Prob. 1Q Ch. 6 - If a “typical” firm reports $20 million of...Ch. 6 - Prob. 3Q Ch. 6 - What is operating capital, and why is it...Ch. 6 - Explain the difference between NOPAT and net...Ch. 6 - Prob. 6Q Ch. 6 - Prob. 7Q Ch. 6 - Prob. 1P Ch. 6 - Prob. 2P Ch. 6 - Prob. 3P

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