PLEASE HELPP!!
Financial Statement Analysis Portfolio
The Income Statement for Pumpkin Co. is shown below:
Pumpkin Co.IncomeStatement
for the Month Ended October 21, 2010
revenues- blank
sales
$120,000.00
operating expenses-blank
salary expense
$10,000.00
supplies expense
$14,000.00
depreciation expense
$4,000.00
net income
$92,000.00
Pumpkin Co. is about to embark on a project that will have a total cost of $300,000.00 over a 10-year period.
1. Calculate the expected annual rate of return on this project.
2.Calculate the cash payback on this project.
To calculate the expected annual rate of return on the project, we need to determine the net annual cash inflows and divide them by the initial investment. To do this, we will need additional information on the expected cash inflows for each year.
Once you have a breakdown of the expected cash inflows for each year, follow these steps to calculate the expected annual rate of return:
1. Subtract the annual cash outflows (total cost divided by the number of years) from the annual cash inflows for each year.
2. Calculate the net annual cash inflow for each year.
3. Calculate the average annual net cash inflow by summing up the net annual cash inflows for each year and dividing by the number of years.
4. Divide the average annual net cash inflow by the initial investment and multiply by 100 to get the expected annual rate of return as a percentage.
To calculate the cash payback on this project, you need to determine how many years it will take for the cash inflows to recover the initial investment.
To calculate the cash payback, follow these steps:
1. Subtract the cash inflows from the initial investment until the remaining balance is zero or positive.
2. Determine the year in which the remaining balance becomes zero or positive.
3. Calculate the cash payback period by dividing the number of years it took to reach zero or positive remaining balance by the number of years in the project.
To proceed with calculations, please provide the breakdown of the expected cash inflows for each year.
To calculate the expected annual rate of return on the project, you need to know the expected annual income from the project and the initial investment cost. However, the information provided in the given financial statement does not include the expected annual income. Therefore, it is not possible to calculate the expected annual rate of return on the project based on the given information.
To calculate the cash payback on the project, you need to determine the time it takes to recover the initial investment. Divide the initial investment cost ($300,000.00) by the net income of the project for the month (which is $92,000.00, as stated in the income statement):
Cash payback period = Initial investment cost / Net income
Cash payback period = $300,000.00 / $92,000.00
Please provide information about the expected annual income from the project, so that we can calculate the expected annual rate of return and further help you with the cash payback calculation.