Question
A A proposed new investment has projected sales of $810,000. Variable costs are 55 percent of sales, and fixed costs are $170,000; depreciation is $71,000.
A
A proposed new investment has projected sales of $810,000. Variable costs are 55 percent of sales, and fixed costs are $170,000; depreciation is $71,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income? (Input all amounts as positive values.)
| Sales | $ |
| Variable costs |
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| Fixed costs |
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| Depreciation |
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| EBT | $ |
| Taxes |
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| Net income | $ |
2. B
| Fill in the missing numbers for the following income statement. (Input all amounts as positive values.) |
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| |||
| Sales | $ | 679,900 |
|
| Costs |
| 434,800 |
|
| Depreciation |
| 107,400 |
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|
| ||
| EBIT | $ |
|
|
| Taxes (35%) |
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|
|
|
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| Net income | $ |
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|
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| Calculate the OCF. |
| OCF | $ |
| What is the depreciation tax shield? |
| Depreciation tax shield | $ |
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