Question

New Ventures Enterprises Inc. Is considering a proposal to invest 600,000 in new Cell Telephone Product. Production equipment which will be depreciated on a straight-line basis with a 6-year life, and no salvage value. The projected

Answer 1

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New Ventures Enterprises Inc.

Income Statement

Sales $565,000

Cost of goods sold

Variable manufacturing cost $100,000

Direct labor cost $150,000

Fixed manufacturing cost $52,500

Total cost of goods sold $302,500

Gross Profit $262,500

Operating Expenses

Selling and administrative $74,000

Operating profit $188,500

Income tax expenses at 15% $28,275

Net Income $160,225