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Question & Answer: A chemical processing firm is planning on adding a duplicate polyethylene plant at another location. The financial information for the first…..

A chemical processing firm is planning on adding a duplicate polyethylene plant at another location. The financial information for the first project year is shown in the following table E Click the icon to view the financial information table (a) Compute the working-capital requirement during the project period The working-capital requirement during the project period is (Round to the nearest dollar.) (b) What is the taxable income during the project period? The taxable income during the project period is S(Round to the nearest dollar.) (c) What is the net income during the project period? The net income during the project period is S(Round to the nearest dollar.) (d) Compute the net cash flow from the project during the first year The net cash flow from the project during the first year is $ (Round to the nearest dollar) More Info Financial Information for First Project Year Sales Manufacturing costs $1,300,000 Direct materials $170,000 180,000 120,000 200,000 Direct labor Overhead Depreciation Operating expenses Equipment purchase Borrowing to finance equipment Increase in inventories Decrease in accounts receivable Increase in wages pavable Decrease in notes payable Income taxes Interest payment on financing 140,000 350,000 180,000 100,000 10,000 40,000 40,000 277,000 20,000 Enter vour answer in each of the an

A chemical processing firm is planning on adding a duplicate polyethylene plant at another location. The financial information for the first project year is shown in the following table. Click the icon to view the financial information table. (a) Compute the working-capital requirement during the project period. The working-capital requirement during the project period is $ . (Round to the nearest dollar.) (b) What is the taxable income during the project period? The taxable income during the project period is $ . (Round to the nearest dollar.) (c) What is the net income during the project period? The net income during the project period is $ . (Round to the nearest dollar.) (d) Compute the net cash flow from the project during the first year. The net cash flow from the project during the first year is $ (Round to the nearest dollar.)

Expert Answer

 

1- working capital requirement
current assets 90000
increase in inventories 100000
decrease in accounts receivables -10000
current liabilities 0
increase in wage payable 40000
decrease in wages payable -40000
change in working capital 90000
2- Taxable income during the year
sales 1300000
less cost of goods sold 670000
gross profit 630000
less operating expenses 140000
EBIT 490000
less interest 20000
Earning before taxes 470000
less taxes 277000
3- net income 193000
4- EBIT 490000
add depreciation 200000
earning before depreciation 690000
change in working capital -90000
increase in accounts receivables -100000
decrease in accounts recivables 10000
increase in wages payable 40000
decrease in notes payable -40000
cash flow from operating activities 600000
cash flow from investing activities -350000
equipment purchase -350000
cash flow from financing activities 160000
borrowings for equipment purchase 180000
less interest payment on financing -20000
net cash flow from project 410000
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