Under the assumption that KMS's market share will increase by 0.23 %0.23% per year, you determine that the plant will require an expansion in 20182018.
Under the assumption that KMS's market share will increase by
0.23 %0.23%
per year, you determine that the plant will require an expansion in
20182018.
The expansion will cost
$ 21.5$21.5
million. Assume the following: the debt financing of the expansion will be delayed accordingly (end of
20182018),
KMS uses a ten-year bond, interest rates remain the same at
7.3 %7.3%,
and KMS's tax rate is
35 %35%.
KMS projects the following depreciation:
| | 20162016 | 20172017 | 20182018 | 20192019 | 20202020 | 20212021 | |
| Depreciation (000) | $ 5 comma 522$5,522 | $ 5 comma 465$5,465 | $ 7 comma 425$7,425 | $ 7 comma 439$7,439 | $ 7 comma 543$7,543 | $ 7 comma 586$7,586 |
Using this information and the data given here
LOADING...
, project net income through
20212021.
The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.
Homework: Chapter 18 Homework Save Score: 0 of 1 pt 8 of 11 (9 complete) HW Score: 63.64%, 7 of 11 pts P 18-14 (similar to) Question Help Under the assumption that KMS's market share will increase by 0.23% per year, you determine that the plant will require an expansion in 2018. The expansion will cost $21.5 million. Assume the following: the debt financing of the expansion will be delayed accordingly (end of 2018), KMS uses a ten-year bond, interest rates remain the same at 7.3%, and KMS's tax rate is 35%. KMS projects the following depreciation: Depreciation (000) 2016 $5,522 2017 $5,465 2018 $7,425 2019 $7,439 2020 $7,543 2021 $7,586 Using this information and the data given here project net income through 2021. The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. (60,710) Cost of Goods Sold EBITDA Depreciation EBIT Interest Expense Pre-tax Income Taxes Net Income Enter any number in the edit fields and then click Check Answer. Current values (000) Outstanding Debt Interest on Debt 2016 $4,775 $349 2017 $4,775 $349 2018 $4,775 $349 2019 $26,275 $1,918 2020 $26,275 $1,918 2021 2 $26,275 $1,918 2016 $74,950 - 60,710 2017 $82,415 -66,756 2018 $90,425 - 73,244 2019 $99,520 -80,611 2020 $108,601 - 87,967 2021 $119,020 -96,406 Income Statement (000) Sales Cost of Goods Sold EBITDA Depreciation EBIT Interest Expense Pre-tax Income Taxes Net Income Homework: Chapter 18 Homework Save Score: 0 of 1 pt 8 of 11 (9 complete) HW Score: 63.64%, 7 of 11 pts P 18-14 (similar to) Question Help Under the assumption that KMS's market share will increase by 0.23% per year, you determine that the plant will require an expansion in 2018. The expansion will cost $21.5 million. Assume the following: the debt financing of the expansion will be delayed accordingly (end of 2018), KMS uses a ten-year bond, interest rates remain the same at 7.3%, and KMS's tax rate is 35%. KMS projects the following depreciation: Depreciation (000) 2016 $5,522 2017 $5,465 2018 $7,425 2019 $7,439 2020 $7,543 2021 $7,586 Using this information and the data given here project net income through 2021. The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. (60,710) Cost of Goods Sold EBITDA Depreciation EBIT Interest Expense Pre-tax Income Taxes Net Income Enter any number in the edit fields and then click Check Answer. Current values (000) Outstanding Debt Interest on Debt 2016 $4,775 $349 2017 $4,775 $349 2018 $4,775 $349 2019 $26,275 $1,918 2020 $26,275 $1,918 2021 2 $26,275 $1,918 2016 $74,950 - 60,710 2017 $82,415 -66,756 2018 $90,425 - 73,244 2019 $99,520 -80,611 2020 $108,601 - 87,967 2021 $119,020 -96,406 Income Statement (000) Sales Cost of Goods Sold EBITDA Depreciation EBIT Interest Expense Pre-tax Income Taxes Net Income
