Company X just signed a contract with Walmart with the hope to increase the revenue by 50% next year. A new softcover manufacturing line would be required, which would include the addition of printing, cutting, and stitching stations. Per Nancy's discussion with Company X's chief financial officer (CFO), Rick Euclid, this would require an $800,000 investment, to be depreciated on a straight-line basis assuming a useful life of twenty years and no salvage value. To store the additional inventory, Nancy authorized the construction of an additional 5,000 square foot warehouse at a cost of $500,000, to be depreciated on a straight-line basis with a useful life of twenty-five years and no salvage value.

In addition to the in-store placement, Nancy considered selling products on Walmart Marketplace, a program allowing third-party vendors to list products on Walmart's website in exchange for a referral fee of 15 percent for books.' Although this would eat into margins, Nancy was convinced that it would be offset by the additional sales volume and discounted expedited shipping options, such as 40 percent off FedEx s shipments. She wanted to grow Company X.'s direct-to-consumer channels to further diversify revenues.

Requirements:

Perform the Projected Financial Statements and provide recommendations for the most effective move that Company X should take.

Company X Income Statements for the Years Ended Dec 2019 and 2020( in $000) Company X Statement of Cash Flow for the Years Ended Dec 2019 and 2020 (in $000 ) Company X Balance Sheet as at 30 Dec 2019 and 2020 (in $000 ) Company X Income Statements for the Years Ended Dec 2019 and 2020( in $000) Company X Statement of Cash Flow for the Years Ended Dec 2019 and 2020 (in $000 ) Company X Balance Sheet as at 30 Dec 2019 and 2020 (in $000 )