Chapter 3 Organizing and Financing a New Venture Operating expenses Depreciation Earnings before interest and taxes Interest Earnings before taxes Taxes Net income Cash and inventories Building and equipment Total assets YEAR 1 75,000 4,000 21,000 1,000 20,000 2 YEAR 2 100,000 8,000 92,000 2,000 90,000 ? 2 YEAR 3 200,000 20,000 780,000 4,000 776,000 7 ? 500,000 300,000 $800,000 50,000 50,000 $100,000 100,000 100,000 $200,000 A Use the tax rate schedules presented in this chapter to estimate the dollar amount of taxes that would have to be paid in each year by HairCare Products Company if the venture is initially formed as a corporation. Also calculate the after tax net income for each year. B Use the tax rate schedules presented in this chapter to estimate the dollar amount of taxes that would have to be paid in each year if HairCare Products Company is orga nized as a proprietorship and represents Francine's only source of income, and if she is single. Also calculate the after-tax net income for each year, c. Use ratios from Chapter 2 to calculate the return on assets model and its net profit margin and asset intensity ratios In order to grow sales, HairCare Products will need to mest in assets to support sales growth. How might the ventures assets be financed E Would you recommend that Hair Care Products Company be initially formed as a pro prietorship or as a comoration Why Should Francine consider chancing the form of Aa D a A ) Chapter 3 Organizing and Financing a New Venture Operating expenses Depreciation Earnings before interest and taxes Interest Earnings before taxes Taxes Net income Cash and inventories Building and equipment Total assets YEAR 1 75,000 4,000 21,000 1,000 20,000 2 YEAR 2 100,000 8,000 92,000 2,000 90,000 ? 2 YEAR 3 200,000 20,000 780,000 4,000 776,000 7 ? 500,000 300,000 $800,000 50,000 50,000 $100,000 100,000 100,000 $200,000 A Use the tax rate schedules presented in this chapter to estimate the dollar amount of taxes that would have to be paid in each year by HairCare Products Company if the venture is initially formed as a corporation. Also calculate the after tax net income for each year. B Use the tax rate schedules presented in this chapter to estimate the dollar amount of taxes that would have to be paid in each year if HairCare Products Company is orga nized as a proprietorship and represents Francine's only source of income, and if she is single. Also calculate the after-tax net income for each year, c. Use ratios from Chapter 2 to calculate the return on assets model and its net profit margin and asset intensity ratios In order to grow sales, HairCare Products will need to mest in assets to support sales growth. How might the ventures assets be financed E Would you recommend that Hair Care Products Company be initially formed as a pro prietorship or as a comoration Why Should Francine consider chancing the form of Aa D a A )