Question

CVS Health Corporation reported sales of $177,526 million, property, plant and equipment (PPE), net of $10,175 million, and capital expenditures of $2,224 million in 2016. If sales are projected to increase 4% per year over the next five years, what is the projected capital expenditures (purchases of new PPE) for 2017?

Answer 1

$2,312.96 million

Step-by-step explanation:

For computing the projected capital structure, first we have to determine the projected sales which is shown below:

= Sales + Sales × increase percentage

= $177,526 million + $177,526 million × 4%

= $177,526 million + $7,101.04 million

= $184,627.04 million

Now the projected capital expenditure would be

= Projected sales × capital expenditures ÷ sales

= $184,627.04 million × $2,224 million ÷ $177,526 million

= $2,312.96 million