46.4A The annual forecasted profit from a project is:

f£ £

Sales 220,000 Labour, materials, and overheads 60,000 Depreciation 15,000

(75,000)

Net profit before tax 145,000 Tax at 30% (43,500)

Net profit after tax 101,500 Equipment with a four-year useful economic life and no residual value will be purchased on 1 September for £60,000. £30,000 additional working capital, which will be recovered in full at the end of the four years, will be required from 1 September. A 25% writing-down allowance will be available throughout the period of the project. Tax at 30% will be payable on 1 June each year, nine months after the end of the company’s financial period on 31 August. Prepare a cash flow budget for the project.