- +44 141 628 6080
- info@tutorsglobe.com

Projected income statement-projected cash flow

Problem:

Your company is thinking about acquiring another corporation. You have two choices; the cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an option. The following are your critical data:

Corporation A:

Revenues = 100K in year one, increasing by 10% each year.

Expenses = 20K in year one, increasing by 15% each year.

Depreciation Expense = 5K each year.

Tax Rate = 25%

Discount Rate = 10%

Corporation B:

Revenues = 150K in year one, increasing by 8% each year.

Expenses = 60K in year one, increasing by 10% each year.

Depreciation Expense = 10K each year.

Tax Rate = 25%

Discount Rate = 11%

You must compute and analyze items (a) through (h) using a Microsoft Excel spreadsheet. Make sure that all calculations can be seen in the background of the applicable spreadsheet cells. In other words, leave an audit trail so that others can see how you arrived at your calculations and analysis. Items (i), (j), and (k) should be submitted in Microsoft Word.

a. A 5-year projected income statement

b. A 5-year projected cash flow

c. Net Present Value

d. Internal Rate of Return

e. Payback Period

f. Profitability Index

g. Discounted Payback Period

h. Modified Internal Rate of Return

i. Based on items (a) through (h), which company would you recommend acquiring?

Now Priced at $25 (50% Discount)

Recommended **(97%)**

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment
## Q : What is the incremental operational cash flows

1. What is the cash flow in Year 0. 2. What is the i ncremental operational cash flows.