Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A firm expects a project to have the following incremental Income Statement Year 2018 2019 Revenues $35.9 $68.5 Costs -21.0 40 Depreciation - 2.2 -2.2

image text in transcribed
A firm expects a project to have the following incremental Income Statement Year 2018 2019 Revenues $35.9 $68.5 Costs -21.0 40 Depreciation - 2.2 -2.2 EBIT 12.7 26.3 Taxes -4.0 -8.0 NOPAT $8.7 $18.3 2020 $48.9 -32.4 -2.2 14.3 -6.0 $8.3 It also expects that the working capital requirements of the project will lead to the following end-of-year balances that have been extracted from the Balance Sheet for the project: Year 2018 2019 2020 Assets: Inventories 1.0 2.2 1.3 Assets: Accounts Receivable 0.7 0.6 0.7 Liabilities: Accounts Payable 0.4 1.6 0.9 It should be assumed that the above balances on the working capital accounts are incremental balances. As an example, you should assume that the shown $1.6 million Accounts Payable balance at the end of 2019 means that A firm expects a project to have the following incremental Income Statement Year 2018 2019 Revenues $35.9 $68.5 Costs -21.0 40 Depreciation - 2.2 -2.2 EBIT 12.7 26.3 Taxes -4.0 -8.0 NOPAT $8.7 $18.3 2020 $48.9 -32.4 -2.2 14.3 -6.0 $8.3 It also expects that the working capital requirements of the project will lead to the following end-of-year balances that have been extracted from the Balance Sheet for the project: Year 2018 2019 2020 Assets: Inventories 1.0 2.2 1.3 Assets: Accounts Receivable 0.7 0.6 0.7 Liabilities: Accounts Payable 0.4 1.6 0.9 It should be assumed that the above balances on the working capital accounts are incremental balances. As an example, you should assume that the shown $1.6 million Accounts Payable balance at the end of 2019 means that

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Handbook Of News Analytics In Finance

Authors: Gautam Mitra, Leela Mitra

1st Edition

047066679X, 978-0470666791

More Books

Students also viewed these Finance questions