A chemical processing firm is planning on adding a duplicate polyethylene plant at another location. The financial
Question:
(a) Compute the working-capital requirement during the project period.
(b) What is the taxable income during the project period?
(c) What is the net income during the project period?
(d) Compute the net cash flow from the project during the first year.
Transcribed Image Text:
TABLE P2.2 Financial Information for First Project Year Sales Manufacturing costs S 1,500,000 $ 150,000 200,000 100,000 200.000 Direct materials Direct labor Overhead Depreciation Operating expenses Equipment purchase Borrowing to finance equipment Increase in inventories Decrease in accounts receivable Increase in wages payable Decrease in notes payable Income taxes Interest payment on financing 50,000 400,000 200,000 100,000 20,000 30,000 40,000 272,000 20,000
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