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2. A chemical processing firm is planning to add a duplicate polyethylene plant at another location. The financial information for the first project year is
2. A chemical processing firm is planning to add a duplicate polyethylene plant at another location. The financial information for the first project year is shown in Table P2.2 (a) Compute the new working-capital requirement during the project period (b) What is the taxable income during the project period? (c) What is the net income during the project period? (d) Compute the net cash flow from the project during the first year. Table P2.2 Financial Information for First Project Year Sales S3,000,000 Manufacturing costs S500,000 500,000 50,000 250,000 750,000 500,000 250.000 Direct materials Direct labour Overhead Depreciation Operating expenses Equipment purchase Borrowing to finance equipment 2. A chemical processing firm is planning to add a duplicate polyethylene plant at another location. The financial information for the first project year is shown in Table P2.2 (a) Compute the new working-capital requirement during the project period (b) What is the taxable income during the project period? (c) What is the net income during the project period? (d) Compute the net cash flow from the project during the first year. Table P2.2 Financial Information for First Project Year Sales S3,000,000 Manufacturing costs S500,000 500,000 50,000 250,000 750,000 500,000 250.000 Direct materials Direct labour Overhead Depreciation Operating expenses Equipment purchase Borrowing to finance equipment
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