Question: A proposed new investment has projected sales…
1）A proposed new investment has projected sales of $840,000. Variable costs are 55 percent of sales, and fixed costs are $173,000; depreciation is $74,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?
Sales $
Variable costs
Fixed costs
Depreciation
EBT $
Taxes Net income $
2）
| Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.73 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,090,000 in annual sales, with costs of $785,000. The project requires an initial investment in net working capital of $310,000, and the fixed asset will have a market value of $215,000 at the end of the project. If the tax rate is 30 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.) |
| Years | Cash Flow |
| Year 0 | $ |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
| If the required return is 13 percent, what is the project’s NPV?
3）
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