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Chapter 9 Case Question Finance Solved
Chapter 9 Case Question Finance Solved
Chapter 9 Case Question Finance Solved
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $ 28,595,000.00 $ 39,375,000.00 $ 60,000,000.00 $ 50,400,000.00 $ 38,400,000.00
Variable Cost $ 13,690,000.00 $ 17,575,000.00 $ 23,125,000.00 $ 19,425,000.00 $ 14,800,000.00
Fixed Costs $ 5,300,000.00 $ 5,300,000.00 $ 5,300,000.00 $ 5,300,000.00 $ 5,300,000.00
Depreciation $ 5,501,650.00 $ 9,351,650.00 $ 6,733,650.00 $ 4,808,650.00 $ 3,438,050.00
EBIT $ 4,103,350.00 $ 7,148,350.00 $ 24,841,350.00 $ 20,866,350.00 $ 14,861,950.00
Taxes $ 1,436,172.50 $ 2,501,922.50 $ 8,694,472.50 $ 7,303,222.50 $ 5,201,682.50
Net Income $ 2,667,177.50 $ 4,646,427.50 $ 16,146,877.50 $ 13,563,127.50 $ 9,660,267.50
Changes Net Working Capital
Year 1 Year 2 Year 3 Year 4 Year 5
Beginning $ - $ 5,719,000.00 $ 7,875,000.00 $ 12,000,000.00 $ 10,080,000.00
Ending $ 5,719,000.00 $ 7,875,000.00 $ 12,000,000.00 $ 10,080,000.00 $ 7,680,000.00
NWC Cash Flow $ (5,719,000.00) $ (2,156,000.00) $ (4,125,000.00) $ 1,920,000.00 $ 2,400,000.00
Opperating Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Opperating Cash Flow $ 8,168,827.50 $ 13,998,077.50 $ 22,880,527.50 $ 18,371,777.50 $ 13,098,317.50
After Tax Salvage Value
Macrs depreciation value $ 8,666,350.00
Actual Salvage Value $ 5,400,000.00
The difference $ 3,266,350.00 Since positive the company depreciated too slow
Taxes $ 1,143,222.50
Taxed Salvage value $ 2,123,127.50
Projected Total Cash Flow
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Operating Cash Flow $ 8,168,827.50 $ 13,998,077.50 $ 22,880,527.50 $ 18,371,777.50 $ 13,098,317.50
Changes in NWC $ (5,719,000.00) $ (2,156,000.00) $ (4,125,000.00) $ 1,920,000.00 $ 2,400,000.00
Capital spending $ (38,500,000.00) $ 2,123,127.50
Total Projected Cash Flows $ (38,500,000.00) $ 2,449,827.50 $ 11,842,077.50 $ 18,755,527.50 $ 20,291,777.50 $ 17,621,445.00
Cumulative cash flow $ (38,500,000.00) $ (36,050,172.50) $ (24,208,095.00) $ (5,452,567.50) $ 14,839,210.00 $ 32,460,655.00
Total Projected Cash Flows
Year Amount
0 $ (38,500,000.00)
1 $ 2,449,827.50
2 $ 11,842,077.50
3 $ 18,755,527.50
4 $ 20,291,777.50
5 $ 17,621,445.00