Question

A proposed new investment has projected sales of $564,000. Variable costs are 37 percent of sales, and fixed costs are $132,000; depreciation is $51,500. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income

Answer 1

Projected net income $135,737.80

Step-by-step explanation:

The computation of the projected net income is shown below:

Sales $564,000

Less: variable cost (37% of sales) $208,680

Less: fixed cost $132,000

Less: depreciation $51,500

Earning before income and taxes $171,820

Less: tax rate at 21% -$36,082.20

Projected net income $135,737.80

Hence, the projected net income is $135,737.80