Question
Suppose a company's total revenues for years 2 and 3 were $382,660 and $404,690 respectively. Also suppose that the gross fixed assets (PP&E) had a
Suppose a company's total revenues for years 2 and 3 were $382,660 and $404,690 respectively. Also suppose that the gross fixed assets (PP&E) had a balance of $146,380 at the end of year 1, $147,498 at the end of year 2, and $148,626 at the end of year 3. If the annual growth in total revenues is 8.66% for the foreseeable future, calculate the forecasted gross fixed asset balance at the end of year 4. Assume the same gross fixed asset turnover in all future years as that in year 3 calculated using the average asset balances. Note that year 3 is the latest year with reported results, while years 4 onwards are all forecasted years.
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