The following schedule reflects the incremental costs and revenues for a capital project. The company uses the straight-line depreciation. The interest expense reflects an allocation of interest on the amount of this investment, based on the company's weighted average cost of 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 Total costs 458,000 Net profit before taxes $192,000 The annual cash flow from this investment, before tax considerations, would be Select one: a. $200,000. b. $270,000. c. $192,000. d. $262,000.
The following schedule reflects the incremental costs and revenues for a capital project. The company uses the straight-line depreciation. The interest expense reflects an allocation of interest on the amount of this investment, based on the company's weighted average cost of 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 Total costs 458,000 Net profit before taxes $192,000 The annual cash flow from this investment, before tax considerations, would be Select one: a. $200,000. b. $270,000. c. $192,000. d. $262,000.
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 a capital project. The company uses the 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 |
|
| Total costs |
458,000 |
|
| Net profit before taxes |
$192,000 |
The annual cash flow from this investment, before tax considerations, would be
Select one:
a. $200,000.
b. $270,000.
c. $192,000.
d. $262,000.
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