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Capital expenditures budget

On January $1,20$Y$6,$ the controller of Omicron Inc. is planning capital expenditures for the years $20$Y$620$Y$9.$ The following interviews helped the controller collect the necessary information for the capital expenditures budget:

Director of Facilities: A construction contract was signed in late $20$Y$5$ for the construction of a new factory building at a contract cost of $$10,000,000.$ The construction is scheduled to begin in $20$Y$6$ and be completed in $20$Y$9.$

Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $$1\mathrm{.}5$ million in equipment in late $20$Y$7.$ I expect that an additional $$200,000$ will be needed early in the following year $(20$Y$8)$ to test and install the equipment before we can begin production. If sales continue to grow, I expect we'll need to invest another $$1,000,000$ in equipment in $20$Y$9.$

Chief Operating Officer: We have really been growing lately. I wouldn't be surprised if we need to expand the size of our new factory building in $20$Y$9$ by at least $35\%.$ Fortunately, we expect inflation to have minimal impact on construction costs over the next four years. Additionally, I would expect the cost of the expansion to be proportional to the size of the expansion.

Director of Information Systems: We need to upgrade our information systems to wireless network technology. It doesn't make sense to do this until after the new factory building is completed and producing product. During $20$Y$8,$ once the factory is up and running, we should equip the whole facility with wireless technology. I think it would cost us $$800,000$ today to install the technology. However, prices have been dropping by $25\%$ per year, so it should be less expensive at a later date.

Chief Financial Officer: I am excited about our long$-$term prospects. My only short$-$term concern is managing our cash flow while we expend the $$4,000,000$ of construction costs in $20$Y$6$ and $$6,000,000$ in $20$Y$7$ on the portion of the new factory building scheduled to be completed in $20$Y$9.$

Use this interview information to prepare a capital expenditures budget for Omicron Inc. for the years $20$Y$620$Y$9.$

Omicron Inc.

Capital Expenditures Budget

For the Four Years Ending December $31,20$Y$6-20$Y$9$

Line Item Description $20$Y$620$Y$720$Y$820$Y$9$

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