- Base Scenario Recalculate Unlevered Net Income For The Year 4 Assuming In Addition That Each Year 10 Of Sales Comes 1 (221.5 KiB) Viewed 26 times
4 assuming, in addition, that each
year 10% of sales comes from customers
who would have purchased an existing Linksys router for
$90/unit (sales price remain constant over
the four years) and that this router
costs $50/unit to
manufacture.
straight-line depreciation, in which the asset's cost (less any expected salvage value) is divided equally over its estimated useful life (we discuss other methods in Section 8.4). If we assume the equipment is purchased at the end of year 0, and then use straight-line depreciation over a five-year life for the new equipment, HomeNet's depreciation expense is $1.5 million per year in years 1 through 5. Deducting Cor Finance TABLE 8.1 SPREADSHEET HomeNet's Incremental Earnings Forecast 1 2 3 5 Year 0 Incremental Earnings Forecast ($000s) 1 Sales 2 Cost of Goods Sold 3 Gross Profit 4 Selling, General, and Administrative 5 Research and Development (15,000) 6 Depreciation 7 EBIT (15,000) 8 Income Tax at 40% 6,000 9 Unlevered Net Income (9,000) 26,000 26,000 26,000 26,000 (11,000) (11,000) (11,000) (11,000) 15,000 15,000 15,000 15,000 (2,800) (2,800) (2,800) (2,800) 0 000 7 (1,500 (1,500) 10,700 10,700 (4,280) (4,280) 6,420 6,420 (1,500) (1,500) (1,500) 10,700 10,700 (1,500) (4,280) (4,280) 600 6,420 6,420 (900) a 'As a result, cash flows that occur at the end of one year will be listed in a different column than those that occur at the start of the next year, even though they may occur only weeks apart. When additional urterly or monthly basis. (See also the Appendix