Question

The Tax Cuts and Jobs Act of 2017 temporarily allows​ 100% bonus depreciation​ (effectively expensing capital​ expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. a. Costs except depreciation The forecasted costs except depreciation will be

Answer 1

Answer and Explanation:

Stockholders' equity next year = current stockholders equity + forecasted dividend

Given that sales is forecasted to grow by 8% next year and 50% is paid out

Given that current stockholders' equity =$22.2(millions)

Forecasted sales next year= $185.8(sale this year) * 1.08= $200.944 million

Forecasted net income = $200.644*0.009688= $1.9438

Given 50% of net income = $1.9438*0.5= $0.9719

Forecasted stockholders equity= $22.2+$0.9719= $23.171