Homework Answers
a)Taxable income during the project period is calculated below:
Taxable income = Sales - Manufacturing cost - Operating cost - Interest payment of financing
=$1552,014 - ($150,000 + $200,000 + $100,000 + $200,000) - $150,423 - $20,000
=$1552,014 - $650,000 - $150,423 - $20,000
= $731,591
Taxable income = $731,591
b)Net income during the project period is calculated below:
Net income = Taxable income - Income Taxes
= $731,591 - $272,688
=$458,903
Net income = $458,903
c) Changes in total current assets is calculated below:
Changes in total current assets = Increase in Inventories - Decrease in Account Receivable
= $97,386 - $20,000
=$77,386
Changes in total current assets = $77,386
d) Changes in total current liabilities is calculated below:
Changes in total current liabilities = Increase in wages payable
= $34,212
Changes in total current liabilities = $34,212
e) The additional working capital requirement during the project period is calculated below:
The additional working capital requirement = Changes in total current assets - Changes in total current liabilities
= $77,386 - $34,212
= $43,174
The additional working capital requirement = $43,174
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Financial Information for First Project Year Sales $1552014 Manufacturing costs Direct materials $150,000 Direct labour $200,000...
please show all calulations 2. A chemical processing firm is planning to add a duplicate polyethylene...
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