Premium Essay

Caledonia Products Integrative Program

In: Business and Management

Submitted By idroz27
Words 940
Pages 4
Caledonia Products Integrative Program

FIN 370 - Finance for Business

|Operating Cash Flow |Year One |Year Two |Year Three |Year Four |Year Five |
|Project Revenue |$21,000,000 |$36,000,000 |$42,000,000 |$24,000,000 |$15,600,000 |
|Cost of Goods Sold |($12,600,000) |($21,600,000) |($25,200,000) |($14,400,000) |($10,800,000) |
|Fixed Costs |($200,000) |($200,000) |($200,000) |($200,000) |($200,000) |
|Gross Profits |$8,200,000 |$14,200,000 |$16,600,000 |$9,400,000 |$4,600,000 |
| | | | | | |
|Depreciation |($1,600,000) |($1,600,000) |($1,600,000) |($1,600,000) |($1,600,000) |
|Net Operating Income |$6,600,000 |$12,600,000 |$15,000,000 |$7,800,000 |$3,000,000 |
| | | | | | |
|Taxes |($2,244,000) |($4,284,000) |($5,100,000) |($2,652,000) |($1,020,000) |
|Net Operating Profit After Taxes |$4,356,000

Similar Documents

Premium Essay

Caledonia

...Caledonia Products Integrative Problem Michelle M. Rayford, Peter Pontone, and Sibylle Letzelter FIN/370 June 18, 2012 Laura Haase Caledonia Products Integrative Problem Question 1 Caledonia should focus on project free cash flows as opposed to accounting profits earned because free cash lows show the value of the projects. Caledonia needs to isolate the project independent from regular company financials to understand how the project will contribute value to the business. Accounting profits earned will take into account the entire business and it will not isolate the project. A good example is dry cleaners that decide to open up a second location. The owner needs to look at the cash flow from the second store on its own to see if it will add enough value on its own. If you look at just the accounting profits, it might indicate that the company will be “more” profitable. However, that does not show how much the new project contributes on its own. Question 2 Incremental Cash Flows Years 1-5 | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | Project Revenues (sales price/unit * # units) | 21,000,000 | 36,000,000 | 42,000,000 | 24,000,000 | 15,600,000 | Cost of Goods Sold ($180/unit) | 12,600,000 | 21,600,000 | 25,200,000 | 14,400,000 | 10,800,000 | Gross Profit | $8,400,000 | $14,400,000 | $16,800,000 | $9,600,000 | $4,800,000 | Cash operating expenses | 200,000 | 200,000 | 200,000 | 200,000 | 200,000 | Depreciation ($7.9M/5) | 1,580,000 | 1,580,000 | 1,580,000 | 1...

Words: 968 - Pages: 4

Free Essay

Test2

...62118 0/nm 1/n1 2/nm 3/nm 4/nm 5/nm 6/nm 7/nm 8/nm 9/nm 1990s 0th/pt 1st/p 1th/tc 2nd/p 2th/tc 3rd/p 3th/tc 4th/pt 5th/pt 6th/pt 7th/pt 8th/pt 9th/pt 0s/pt a A AA AAA Aachen/M aardvark/SM Aaren/M Aarhus/M Aarika/M Aaron/M AB aback abacus/SM abaft Abagael/M Abagail/M abalone/SM abandoner/M abandon/LGDRS abandonment/SM abase/LGDSR abasement/S abaser/M abashed/UY abashment/MS abash/SDLG abate/DSRLG abated/U abatement/MS abater/M abattoir/SM Abba/M Abbe/M abbé/S abbess/SM Abbey/M abbey/MS Abbie/M Abbi/M Abbot/M abbot/MS Abbott/M abbr abbrev abbreviated/UA abbreviates/A abbreviate/XDSNG abbreviating/A abbreviation/M Abbye/M Abby/M ABC/M Abdel/M abdicate/NGDSX abdication/M abdomen/SM abdominal/YS abduct/DGS abduction/SM abductor/SM Abdul/M ab/DY abeam Abelard/M Abel/M Abelson/M Abe/M Aberdeen/M Abernathy/M aberrant/YS aberrational aberration/SM abet/S abetted abetting abettor/SM Abeu/M abeyance/MS abeyant Abey/M abhorred abhorrence/MS abhorrent/Y abhorrer/M abhorring abhor/S abidance/MS abide/JGSR abider/M abiding/Y Abidjan/M Abie/M Abigael/M Abigail/M Abigale/M Abilene/M ability/IMES abjection/MS abjectness/SM abject/SGPDY abjuration/SM abjuratory abjurer/M abjure/ZGSRD ablate/VGNSDX ablation/M ablative/SY ablaze abler/E ables/E ablest able/U abloom ablution/MS Ab/M ABM/S abnegate/NGSDX abnegation/M Abner/M abnormality/SM abnormal/SY aboard ...

Words: 113589 - Pages: 455