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Analyze the case study, Frank Smith Plumbing. Analyze the Frank Smith Plumbing's Financial Statement spreadsheet. Compare the cost of the truck to the cash flow
Analyze the case study, "Frank Smith Plumbing."
Analyze the "Frank Smith Plumbing's Financial Statement" spreadsheet.
Compare the cost of the truck to the cash flow records
Compile your calculations in a Microsoft Excel document
Develop a 1,050-word analysis and include the following:
- Explain why limited leverage is good for business. Show the profitability of the project so that Stephanie can convince her father to purchase the truck by borrowing money.
- Explain how Stephanie should convince her mother that it is inappropriate to call the bank manager and his wife for assistance in getting the loan approval?
- Analyze whether the investment in the truck is profitable.
- Explain whether it is more beneficial for Frank to close his business.
- Explainwhat you would do in this same situation.
Format your assignment consistent with APA guidelines.
Frank Smith Plumbing Data Needed for analysis: Year-1 Year-2 Project Cost of Capital (borrowing) 12.00% Cost of Truck $200,000 Cost of additional equiment attached to truck $15,000 Tax rate 35% Annual Before Tax & Depreciation Truck Projected Earnings $70,000 $70,000 Depreciation Percentage Rate (MACRS)* 20.0% 32.0% * The proposed truck has an estimated economic life of seven years but will be treated as a five-year MACRS property Calculate the following -- light yellow highlighted cells need to be co Year-0 Year-1 Year-2 Annual Before Tax & Depreciation Truck Projected Earnings Depreciation Expense Annual Before Tax Truck Projected Earnings Tax Annual Projected Truck Earnings Depreciation to add back Projected Truck Net Cash Flow Decision Criteria: Pay Back Period Discounted Pay Back Period (DPB)** Net Present Value Internal Rate of Return Profitability Index Years Years Discounted Cash Flow Needed for DPB Calc. Recommendations: mith Plumbing ded for analysis: Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 $65,000 $60,000 $55,000 $50,000 $40,000 $30,000 19.2% 11.5% 11.5% 5.8% ed as a five-year MACRS property for depreciation purposes. 0.0% 0.0% Year-7 Year-8 ow highlighted cells need to be completed sion Criteria: mmendations: Year-3 Year-4 Year-5 Year-6Step by Step Solution
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