Pag 66) A company needs an increase in working capital of $50,000 in a project t
ID: 2594824 • Letter: P
Question
Pag 66) A company needs an increase in working capital of $50,000 in a project that will last 4 years. The company's tax rate is 3096 and its after-tax discount rate is 8%. The present value of the release of the working capital at the end of the project is closest to: A) S36,750 B) $15,000 C) S25,726 D) $35,000 67. Last year the sales at Summit Corporation were $400,000 and were all cash sales. The expenses at Summit were $250,000 and were all cash expenses. The tax rate was 40%. The after- tax net cash inflow at Summit last year was: A) $150,000 B) $60,000 C) $90,000 D) $400,000 68. Cridberg Corporation's selling and administrative expenses for last year totaled $260,000. During the year the company's prepaid expense account balance increased by $18,000 and accrued liabilities decreased by $12,000. Depreciation for the year was $25,000. Based on this information, selling and administrative on the statement of cash flows would be: A) $255,000 B) $315,000 C) $205,000 D) $265,000 expenses adjusted to a cash basis under the direct method 69. Portia's Salon is contemplating an increase in their rental space that will result in a before-tax rent increase of SI 4,500 per month. If their tax rate is 40% what is the after-tax monthly increase in rent cost? a. 5,800 b. S 8,700 c. $20.300
Explanation / Answer
ANSWER:question 66
Present value of working capital =50000(pvf 8% 4 years)
= 50000*0.735
=36750
ANSWER :question 37
Cash sales =$400000
cash expenses =$250000
income =$150000
less tax@40% =60000
net cah inflow =90000
question no69
rental income =$14500
tax@ 40% =$5800
remaining increase in rent = $8700
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