Below is an Income and cash flow statements that management has approved. (If there are errors or oversights, that is...

cmui

Main
Similar Questions

Home >Homework Answsers >Business & Finance homework help >Accounting homework help

Below is an Income and cash flow statements that management has approved. (If there are errors or oversights, that is their problem, not yours). Start each question from the original data. Cells F14:F22 contain the original values in case you need to get back to them.
a	Determine the unit price that would achieve a cash flow in week 6 of $500,000
b	Determine the sensitivity of the internal rate of return to a 10%, 25% and 50% increase in investment? (start with original values)
c	Determine the expected present worth for the following data where Forecast 1 is the current values. (start with original values)
		Forecast 1 (current Values)	Forecast 2	Forecast 3	cell
	Unit Price	$35.99	$40.00	$35.00	C14
	COGS each	$12.50	$15.00	$11.50	C15
	S.G. & A.	$800,000	$1,000,000	$900,000	C16
	Sales Quantity Forecast year 1	50,000	40,000	60,000	D23
	Probability	50%	30%	20%

					Original Values
	Unit Price	$35.99			$35.99
	COGS each	$12.50			$12.50
	S.G.& A.	$800,000			$800,000
	salvage	$100,000	in year 6		$100,000
	Income tax rate	35%			35%
	Capital Gains Tax rate	15%			15%
	Working capital	no change			no change
	MARR	15%			15%
	Investment	$2,000,000			$2,000,000
	Sales Quantity Forecast		50,000	60,000	72,000	86,400	103,680	124,416
	Depreciation MACRS	5	20.00%	32.00%	19.20%	11.52%	11.52%	5.76%

	Income Statement	0	1	2	3	4	5	6
	Sales revenue		$1,799,500	$2,159,400	$2,591,280	$3,109,536	$3,731,443	$4,477,732
	Cost of goods sold		($625,000)	($750,000)	($900,000)	($1,080,000)	($1,296,000)	($1,555,200)
	Gross Margin		$1,174,500	$1,409,400	$1,691,280	$2,029,536	$2,435,443	$2,922,532
	General, Sales and Admin.		($800,000)	($800,000)	($800,000)	($800,000)	($800,000)	($800,000)
	Depreciation		($400,000)	($640,000)	($384,000)	($230,400)	($115,200)	($57,600)
	EBIT		($25,500)	($30,600)	$507,280	$999,136	$1,520,243	$2,064,932
	Income tax		$8,925	$10,710	($177,548)	($349,698)	($532,085)	($722,726)
	Net income		($16,575)	($19,890)	$329,732	$649,438	$988,158	$1,342,206

	Cash Flow Statement
	Net Income		($16,575)	($19,890)	$329,732	$649,438	$988,158	$1,342,206
	Add depreciation		$400,000	$640,000	$384,000	$230,400	$115,200	$57,600
	Investment	(2,000,000)
	Change in Working Capital		($179,950)	($35,990)	($43,188)	($51,826)	($62,191)	($74,629)
	Salvage							$100,000
	Tax on gain							$15,000
	Cash flow	($2,000,000)	$203,475	$584,120	$670,544	$828,013	$1,041,167	$1,440,177

		Present Worth =	IRR
		$673,198	23.95%