The following schedule reflects the incremental costs and revenues for acapital project. The company uses straight-line depreciation. The interestexpense reflects an allocation of interest on the amount of this investment,based on the company’s weighted average cost capital: Revenues $650,000 Direct costs $270,000 Variable overhead 50,000 Fixed overhead 20,000 Depreciation 70,000 General & administrative 40,000 Interest expense 8,000 458,000 Net profit before taxes $192,000 ══════ The annual cash flow from this investment, before tax considerations, would be:
The following schedule reflects the incremental costs and revenues for acapital project. The company uses straight-line depreciation. The interestexpense reflects an allocation of interest on the amount of this investment,based on the company’s weighted average cost capital: Revenues $650,000 Direct costs $270,000 Variable overhead 50,000 Fixed overhead 20,000 Depreciation 70,000 General & administrative 40,000 Interest expense 8,000 458,000 Net profit before taxes $192,000 ══════ The annual cash flow from this investment, before tax considerations, would be:
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1PA: Average rate of return method, net present value method, and analysis for a service company The...
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The following schedule reflects the incremental costs and revenues for acapital project. The company uses straight-line
Revenues $650,000
Direct costs $270,000
Variable overhead 50,000
Fixed overhead 20,000
Depreciation 70,000
General & administrative 40,000
Interest expense 8,000
458,000
Net profit before taxes $192,000
══════
The annual
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