Trusted by Students Everywhere
Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
A proposed new investment has projected sales of $635,000
A proposed new investment has projected sales of $635,000. Variable costs are 44 percent of sales, and fixed costs are $193,000; depreciation is $54,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?
Expert Solution
Answer:
| Sales | $635,000 |
| Variable cost @44% of sales | = 44%*635,000 = 279,400 |
| Fixed cost | $193,000 |
| EBITDA = sales - variable cost - fixed cost | =$162,600 |
| Depreciation | $54,000 |
| EBIT | $108,600 |
| Tax@35% | $38,010 |
| PAT = EBIT - tax | $70,590 |
Please note that as there is no interest cost, EBIT is same as PBT and we only need to deduct the taxes post this to achieve the net income of the income statement.
Thus projected Net Income is $70,590
Archived Solution
Unlocked Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
Already a member? Sign In
Important Note:
This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.
For ready-to-submit work, please order a fresh solution below.
For ready-to-submit work, please order a fresh solution below.
Or get 100% fresh solution
Get Custom Quote
