Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 13F15
NPV is computed by deducting initial investment amount from the present value.
Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:
Computation of annual cash inflow when variable expenses changed to 45%:
To determine
Particulars Amount ($) Sales 2,735,000 Less: Variable expenses 45% 1,230,750
Contribution margin 1,504,250 Less: Fixed expenses 735,000
Earnings before depreciation, interest and taxes 769,250 Less: Depreciation 595,000
Earnings after depreciation or EBIT 174,250 Add: Depreciation 595,000
Annual cash inflow 769,250
| Particulars | Amount ($) |
| Sales | 2,735,000 |
| Less: Variable expenses 45% | 1,230,750
|
| Contribution margin | 1,504,250 |
| Less: Fixed expenses | 735,000
|
| Earnings before depreciation, interest and taxes | 769,250 |
| Less: Depreciation | 595,000
|
| Earnings after depreciation or EBIT | 174,250 |
| Add: Depreciation | 595,000
|
| Annual | 769,250
|
Computation of actual
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Chapter 12 Solutions
Introduction To Managerial Accounting
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