Questions from Corporate Finance

Q: Parker & Stone, Inc., is looking at setting up a

Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $6 million in anticipation of using it as...

Q: Winnebagel Corp. currently sells 30,000 motor homes per year

Winnebagel Corp. currently sells 30,000 motor homes per year at $53,000 each, and 12,000 luxury motor coaches per year at $91,000 each. The company wants to introduce a new portable camper to fill out...

Q: A proposed new investment has projected sales of $830,000

A proposed new investment has projected sales of $830,000. Variable costs are 60 percent of sales, and fixed costs are $181,000; depreciation is $77,000. Prepare a pro forma income statement assuming...

Q: Consider the following income statement: Sales…………………………… m,……$

Consider the following income statement: Sales…………………………… m,……$824,500 Costs……………………………….….538,900 Depreciation……………..………….126,500 EBIT………………………………………….?….. Taxes (34%)……………………………..…?….. Net income……...

Q: A proposed new project has projected sales of $108,000

A proposed new project has projected sales of $108,000, costs of $51,000, and depreciation of $6,800. The tax rate is 35 percent. Calculate operating cash flow using the four different approaches desc...

Q: A piece of newly purchased industrial equipment costs $1,080

A piece of newly purchased industrial equipment costs $1,080,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and end-of-the-year book values for...

Q: Consider an asset that costs $548,000 and is depreciated

Consider an asset that costs $548,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be...

Q: An asset used in a four-year project falls in the

An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $7,900,000 and will be sold for $1,400,000 at the end of the project. If...

Q: Summer Tyme, Inc., is considering a new three year expansion

Summer Tyme, Inc., is considering a new three year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight-line to zero over its...

Q: In the previous problem, suppose the project requires an initial investment

In the previous problem, suppose the project requires an initial investment in net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. What...