Question

your health corporation reported sales of $177,526 million, property, plant and equipment (ppe), net of $10,175 million, and capital expenditures of $2,308 million in the current year. 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 the following year?

Answer 1

The projected capital expenditures for the following year would be -$3,073.96 million (a decrease in capital expenditures).

Step-by-step explanation:

To calculate the projected capital expenditures (purchases of new PPE) for the following year, we need to use the sales growth rate of 4% per year. First, we calculate the growth in sales: $177,526 million x 4% = $7,101.04 million. Then, we subtract the increase in net PPE from the growth in sales to get the projected capital expenditures. $7,101.04 million - $10,175 million = -$3,073.96 million. Therefore, the projected capital expenditures for the following year would be -$3,073.96 million (negative value means a decrease in capital expenditures).