Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ken Smith wants to start a deck and fence company. To start the business, Ken plans to invest $70,000 in pick-up trucks and tools. Ken

Ken Smith wants to start a deck and fence company. To start the business, Ken plans to invest $70,000 in pick-up trucks and tools. Ken is forecasting that he will build 100 decks in the first year and 120 decks in years 2 and 3. He anticipates that the average deck will be priced at $6,500. Ken estimates that the cost of lumber for the typical deck is $2,000. Ken estimates that rent, office expenses, vehicle expenses, wages and salaries will total $350,000 per year. The corporate tax rate is 30%. What are operating cash flows in the first year? (Assume that depreciation is not tax deductible.) Round your answers to the nearest dollar.

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 Certified Lease And Finance Professionals Handbook

Authors: Deborah Reuben, Certified Lease & Finance Professionals, Equipment Finance Industry Experts

6th Edition

171743388X, 978-1717433886

More Books

Students also viewed these Finance questions

Question

Describe the job youd like to be doing five years from now.

Answered: 1 week ago

Question

So what disadvantages have you witnessed? (specific)

Answered: 1 week ago