Road Kings 2014YearYearYearYearYearYearYearYear01346OPERATING SUMMARYPrice per bus225,5007,750225,500225,500225,500225,500225,500225,500Units sold7,7507,7501,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,0007,7507,7507,7507,750Revenues7Labor per unit9 Parts per unit10 engine Detroit11 Sales/Administration per year12 Bus Warranty per unit13 Engine Warranty per unit14 Depreciation52,00094,000852,00094,00020,000250,000,00052,00052,00052,00052,00052,00094,00094,00094,00094,000155,000,00094,000155,000,000155,000,000250,000,0001,100155,000,000155,000,000155,000,000250,000,000250,000,0001,1001,000250,000,000250,000,000250,000,0004,7761,1001,1001,10006,5121,0001,0001,0001,0001,000360,000,00060,000,000300,000,00060,000,000120,000,000180,000,000240,000,000EBIT ($000)151,282,476,9001,222,476,900 1,162,476,900 1,102,476,900 1,042,476,900982,478,00016 Taxes @ 40%NOPAT ($000)1718 Add back depreciation19Operating Cash Flow ($000) YearYearYearYearYearYearYear78910111213225,500225,500225,500225,500225,500225,500225,5007,7507,7501,747,625,000 1,747,625,0007,7507,7507,7507,7507,7501,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,6 25,00052,00094,00052,00094,00052,00052,00052,00052,00052,00094,00094,000155,000,00094,000155,000,00094,000155,000,00094,000155,000,000155,000,000155,000,000155,000,000250,000,000250,000,000250,000,000250,000,000250,000,000250,000,000250,000,00000001,0001,0001,0001,0001,0001,0001,000360,000,000420,000,000480,000,000540,000,000600,000,000660,000,000720,000,000982,478,000922,478,000862,478,000802,478,000742,478,000 682,478,000622,478,000

Question
Asked Dec 1, 2019
1 views

What would taxes be with a marginal rate of 40% for each year?

What would the add back depreciation for each year be with straight line depreciaiton of $720 million over 12 years?

Road Kings 2014
Year
Year
Year
Year
Year
Year
Year
Year
0
1
3
4
6
OPERATING SUMMARY
Price per bus
225,500
7,750
225,500
225,500
225,500
225,500
225,500
225,500
Units sold
7,750
7,750
1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000
7,750
7,750
7,750
7,750
Revenues
7
Labor per unit
9 Parts per unit
10 engine Detroit
11 Sales/Administration per year
12 Bus Warranty per unit
13 Engine Warranty per unit
14 Depreciation
52,000
94,000
8
52,000
94,000
20,000
250,000,000
52,000
52,000
52,000
52,000
52,000
94,000
94,000
94,000
94,000
155,000,000
94,000
155,000,000
155,000,000
250,000,000
1,100
155,000,000
155,000,000
155,000,000
250,000,000
250,000,000
1,100
1,000
250,000,000
250,000,000
250,000,000
4,776
1,100
1,100
1,100
0
6,512
1,000
1,000
1,000
1,000
1,000
360,000,000
60,000,000
300,000,000
60,000,000
120,000,000
180,000,000
240,000,000
EBIT ($000)
15
1,282,476,9001,222,476,900 1,162,476,900 1,102,476,900 1,042,476,900
982,478,000
16 Taxes @ 40%
NOPAT ($000)
17
18 Add back depreciation
19
Operating Cash Flow ($000)
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Road Kings 2014 Year Year Year Year Year Year Year Year 0 1 3 4 6 OPERATING SUMMARY Price per bus 225,500 7,750 225,500 225,500 225,500 225,500 225,500 225,500 Units sold 7,750 7,750 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 7,750 7,750 7,750 7,750 Revenues 7 Labor per unit 9 Parts per unit 10 engine Detroit 11 Sales/Administration per year 12 Bus Warranty per unit 13 Engine Warranty per unit 14 Depreciation 52,000 94,000 8 52,000 94,000 20,000 250,000,000 52,000 52,000 52,000 52,000 52,000 94,000 94,000 94,000 94,000 155,000,000 94,000 155,000,000 155,000,000 250,000,000 1,100 155,000,000 155,000,000 155,000,000 250,000,000 250,000,000 1,100 1,000 250,000,000 250,000,000 250,000,000 4,776 1,100 1,100 1,100 0 6,512 1,000 1,000 1,000 1,000 1,000 360,000,000 60,000,000 300,000,000 60,000,000 120,000,000 180,000,000 240,000,000 EBIT ($000) 15 1,282,476,9001,222,476,900 1,162,476,900 1,102,476,900 1,042,476,900 982,478,000 16 Taxes @ 40% NOPAT ($000) 17 18 Add back depreciation 19 Operating Cash Flow ($000)

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Year
Year
Year
Year
Year
Year
Year
7
8
9
10
11
12
13
225,500
225,500
225,500
225,500
225,500
225,500
225,500
7,750
7,750
1,747,625,000 1,747,625,000
7,750
7,750
7,750
7,750
7,750
1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,6 25,000
52,000
94,000
52,000
94,000
52,000
52,000
52,000
52,000
52,000
94,000
94,000
155,000,000
94,000
155,000,000
94,000
155,000,000
94,000
155,000,000
155,000,000
155,000,000
155,000,000
250,000,000
250,000,000
250,000,000
250,000,000
250,000,000
250,000,000
250,000,000
0
0
0
0
1,000
1,000
1,000
1,000
1,000
1,000
1,000
360,000,000
420,000,000
480,000,000
540,000,000
600,000,000
660,000,000
720,000,000
982,478,000
922,478,000
862,478,000
802,478,000
742,478,000 682,478,000
622,478,000
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Year Year Year Year Year Year Year 7 8 9 10 11 12 13 225,500 225,500 225,500 225,500 225,500 225,500 225,500 7,750 7,750 1,747,625,000 1,747,625,000 7,750 7,750 7,750 7,750 7,750 1,747,625,000 1,747,625,000 1,747,625,000 1,747,625,000 1,747,6 25,000 52,000 94,000 52,000 94,000 52,000 52,000 52,000 52,000 52,000 94,000 94,000 155,000,000 94,000 155,000,000 94,000 155,000,000 94,000 155,000,000 155,000,000 155,000,000 155,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 250,000,000 0 0 0 0 1,000 1,000 1,000 1,000 1,000 1,000 1,000 360,000,000 420,000,000 480,000,000 540,000,000 600,000,000 660,000,000 720,000,000 982,478,000 922,478,000 862,478,000 802,478,000 742,478,000 682,478,000 622,478,000

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Expert Answer

Step 1

Note: According to the question, depreciation on $720 million for 12 years using straight-line method should be $60,000,000 ( $720000000/12). Therefore, this amount should be added each year to NOPAT. EBIT is calculated using the depreciation value in the screen shot, but as per your question I am adding back $60,000,000 as depreciation.

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E G M H Year 0 Year 1 Year 2 Year 7 Year 4 Year 3 Year 5 Year 6 48 $1.74.76.25.000.00 S1.74.76,25.000.00 $1.74,76.25,000,00 $1.74.76.25.000,00 $1.74.76.25.000,00 $ 1.74,76.25,000.00 $1,28,24,76,900.00 1,22,24,76,900.00 S 1,16,24,76,900.00 $1,10,24,76,900.00 S51,29,90,760.00 S 48,89.90,760.00 S 46,49,90,760.00 S 44,09,90,760.00 S 41,69,90,760.00 $ 39,29,91,200.00 S 76,94,86,140.00 S 73,34,86,140.00|S 69,74,86,140.00 66,14,86,140.00 S 62,54,86,140.00 S 58,94,86,800.00 Revenue 49 S1,04,24,76,900.00 $ 98.24,78,000.00 50 EBIT 51 Tax @ 40% 52 NOPAT 53 Add depreciation 6.00.00.000.00 S 6.00,00,000.00 S S 82,94,86,140.00 79,34,86,140.00 S 75,74,86,140.00 S 72,14,86,140.00 S 68,54,86,140.00 S 64,94,86,800.00 6,00,00,000.00 S 6.00,00,000,00 6.00.00,000,00 S 6,00,00,000.00 54 Operating cash flow

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Step 2

Excel Wrokings:

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Е F G Н K L M Year 1 Year 0 Year 2 Year 4 1747625000 1747625000 1747625000 1747625000 1282476900 1222476900 1162476900 1102476900 Year 3 Year 5 Year 6 1747625000 1747625000 1042476900 982478000 =L50 40%|M50*40% =L50-L51 -6000000060000000 =L52+L53 Year 7 48. 49 Revenue 50 EBIT - H50*40%150*40% -K50*40% =K50-K51 51 Tax@ 40% 52 NOPAT 53 Add depreciation 54 Operating cash flow J50 40% - H50- H51 -M50-M51 =J50 - J51 -60000000600000006000000060000000 J52+J53 = 150-151 -Н52+Н53 -52+153 =K52+K53 =M52+M53

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Step 3
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E F G Year 9 Year 10 Year 11 Year 13 Year S Year 12 58 1,74,76,25,000.00 $ 1,74,76,25,000.00 $1,74,76,25,000.00 $1,74,76,25,000.00 $ 1,74,76,25,000.00 $1,74,76,25.000.00 86,24.78,000.00 S 80,24,78,000.00 34,49,91,200.00 S 32,09,91,200.00 S 29,69,91,200.00 S 27,29,91,200.00 S 24,89 91,200.00 51,74,86,800.00 S 48,14,86,800.00 $ 44,54,86,800.00 S 40,94,86,800.00 S 37,34,86,800.00 6,00,00,000.00 S 57,74,86,800.00 S 54,14,86,800.00 $ 50,54,86,800.00 46,94,86,800.00 S 43,34,86,800.00 Revenue 59 74,24,78,000.00 S 68,24,78,000.00 S 62,24,78,000.00 92,24,78,000.00 EBIT 60 61 Tax 40% ১ 36,89,91,200.00 55.34,86,800 00 $ 62 NOPAT 6.00,00,000,00 S 6,00,00,000,00 S 6,00,00.000.00 63 Add depreciation 64 Operating cash flow 6,00,00,000.00 S 6,00,00,000,00 61,34,86,800.00 $

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