The annual profit from a project is forecasted as: Sales 110,000 Labour, materials, and overheads 30,000
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The annual profit from a project is forecasted as:
£
Sales 110,000 Labour, materials, and overheads 30,000 Depreciation 20,000 50,000 Net profit before tax 60,000 Tax at 40% 24,000 Net profit after tax 36,000 Equipment with a five-year useful economic life and no residual value will be purchased on 1 September for £30,000. £15,000 additional working capital, which will be recovered in full at the end of the five years, will be required from 1 September. A 25 per cent writing-down allowance will be available throughout the period of the project. Tax at 40 per cent 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.? p-968
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