P. 1
Q402Fall12

Q402Fall12

|Views: 73|Likes:
Published by Jamie Woods

More info:

Published by: Jamie Woods on Nov 20, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

11/28/2012

pdf

text

original

EC 314: Public and Private Investment Fall 2012 Q4: Income Cash Flow #2

PASS Name:

NO PASS

You took out some advertisement in year one at a cost of $20,000. The advertisement increased sales by $15,000 in years one and two before returned to the original levels in year three. The increase in sales meant in increase in average accounts receivable by $7,000. Average accounts receivable returned to previous levels in year three. Your firm faces a combined tax rate of 40.00% and a MARR of 5.00%.
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 3 Year 33.33 44.45 14.81 7.41 5 Year 20.00 32.00 19.20 11.52 11.52 5.76 7 Year 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 10 Year 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 15 Year 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95

Income Statement Year 1 Year 2 Year 3 Year 4 Operating Revenue Operating Expenses Interest Depreciation Taxable Income Tax Net Income Cash Flow Operations Net Income Depreciation Investments Working Capital Gains Tax Finance Net Cash Flow 1. Fill in the Income and Cash Flow Statement above. 2. Is this a good investment?

2

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->