Diff 2 Section 81 Forecasting Earnings Skill Conceptual 26 What is an

Diff 2 section 81 forecasting earnings skill

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26) What is an opportunity cost? Should it be included in the incremental cash flows for a project? Why or why not?
27) Construct a simple income statement showing the incremental EBIT and the incremental unlevered net income for all three years of the Sisyphean Companies project. Answer: Incremental Earnings ForecastYear 1 2 3 Units2,0002,2002,420 Sales (units × $18) 36,000 39,600 43,560 Cost of Good Sold (units × $9) 18,000 19,800 21,780 Gross Profit 18,000 19,800 21,780 Depreciation ($30,000/3) 10,000 10,000 10,000 EBIT 8,000 9,800 11,780 Income tax at 35% 2,800 3,430 4,123 Unlevered net income 5,200 6,370 7,657 Diff: 3 Section: 8.1 Forecasting Earnings Skill: Analytical
FINA1221/2221 2016 Sem 1 Final Exam Multiple-Choice Question Revision Pool 61 8.2 Determining Free Cash Flow and NPV

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