AnhNguyenFI515Week6Lab - 12­2 Operating Cash Flows for the...

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Unformatted text preview: 12­2 Operating Cash Flows for the first year of Project's Life Sales revenue Operating costs Depreciation Oper. income before taxes (EBIT) Taxes on operating income (40%) Net operating profit after taxes (NOPAT) Add back depreciation Operating cash flow $10,000,000 7,000,000 2,000,000 1,000,000 400,000 600,000 2,000,000 $2,600,000 12­3 Net Salvage Values at End of Project Equipment's original cost Depreciation (80%) Book value when salvagedb Market value when salvaged Expected gain or lossc Taxes paid or tax credit Equipment 20,000,000 16,000,000 4,000,000 $5,000,000 1,000,000 400,000 Net cash flow from salvaged $4,600,000 14­1 Forecast growth rate in sales = AFN= ∆ Required Assets ∆ Required Assets 10% - ∆ Spontaneous Liabilities Asset to Sales Ratio = = ∆ Spontaneous Liabilities = 0.600 $600,000.00 = = ∆ Retained Earnings Spontaneous Liab. to Sales Ratio 0.100 $100,000.00 = Profit Margin = - ∆ Retained Earnings x ∆ Sales x $1,000,000.00 x ∆ Sales x $1,000,000.00 x Sales x = = AFN= ∆ Required Assets = $600,000.00 AFN= $410,000.00 0.0500 $90,000.00 x - ∆ Spontaneous Liabilities - ∆ Retained Earnings - $100,000.00 - $90,000.00 $6,000,000.0 x Sales Assets Current liabilities ­ AP ­ Note payable ­ accruals After tax profit margin Forecasted payout ratio Retention Ratio 2006 2007 5,000,000.00 6,000,000.00 3,000,000.00 1,000,000.00 250,000.00 500,000.00 250,000.00 5% 70% 0.300 ...
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This note was uploaded on 06/15/2011 for the course FI515 FI515 taught by Professor Fi515 during the Spring '10 term at Keller Graduate School of Management.

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AnhNguyenFI515Week6Lab - 12­2 Operating Cash Flows for the...

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