The annual forecasted profit from a project is:

Equipment with a four-year useful economic life and no residual value will be purchased on 1 September for £60,000. £30,000 additional working capital, which will be recovered in full at the end of the four years, will be required from 1 September. A 25 per cent writing-down allowance will be available throughout the period of the project. Tax at 30 per cent will be payable on 1 June each year, nine months after the end of the company’s financial period on 31 August. Prepare a cash flow budget for the project.

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Sales Labour, materials, and overheads Depreciation Net profit before tax Tax at 30% Net profit after tax £ 60,000 15,000 £ 220,000 (75,000) 145,000 (43,500) 101,500