Need Some Help
I know a variation of this question is posted almost everyday, but I can't figure this one out. Friend of mine got this in a first round. Just a simple accounting question:
Purchase $100 PPE (10 yr straight line) Financed by 50% Equity, 50% Debt (10% Interest) 40% Tax
Flow through stmts for year 1:
Here's what I can come up with...
I/S Dep (10) Int Exp (5) Taxable Income (15) NI (15)(1-.4)=(9)
C/F NI (9) Dep +10 Invest PPE (100) Equity +50 Net Cash=(49)
B/S Cash (49) PPE 90 (100-10dep) Total Assets=41
Liab/OE Debt 50 Equity 50 RE (9) Total Liab/OE=91
Obviously that doesn't balance, but that seems like I'm pretty close. Am I making a mistake on the CF statement? Thanks for the help.
Everything balances. You forgot Debt in CF.
Balance Sheet: Asset: Cash [SPACEHOLDER] >>> CF = +1 PPE +100
Acc. Depreciation (10)Total Asset: +91
Liability: Debt +50
Shareholder's EQ: Stock +50
R.Earning [SPACEHOLDER] >>> Net Income = (-9)L + S EQ: 91
Income Statement: Depreciation (10) Interest (5)
Tax (0.4*15)Net Income (15*0.6)=(9)
Cash Flow: Net Income (9) Depreciation +10 CapEx -100 Debt +50
Stock +50CF: +1
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