2016 2017 2018 2019 2020 2021 2022 Investment: Capital Outlay 16,000 2,000 0 0 0 0 0 Net Working Capital (10% Sales) 0 400 600 0 0 0 0 Total Investment 16,000 2,400 600 0 0 0 0 Investment Recovery : Equipment Salvage ($1,080) Net Working Capital (full recovery) (1,000) Earnings before Interest and Taxes (EBIT): Sales Revenue 4,000 10,000 10,000 10,000 10,000 10,000 Cost of Goods Sold (75% Sales) 75% (3,000) (7,500) (7,500) (7,500) (7,500) (7,500) SG&A (5% Sales) 5.0% (200) (500) (500) (500) (500) (500) Operating Savings 2,000 3,500 3,500 3,500 3,500 3,500 Depreciation ($18,000/6) (3,000) (3,000) (3,000) (3,000) (3,000) (3,000) Total Costs & Expenses (4,200) (7,500) (7,500) (7,500) (7,500) (7,500) EBIT - Taxes (40%) NOPAT + Depreciation - Investment = Free Cash Flow Present Value of Free Cash Flows Should the company undertake the project? Why or why not?

For each of the following situations, indicate whether you agree or disagree with the financial reporting practice employed and state the basic assumption, component, or accounting principle that is applied (if you agree) or violated (if you disagree).wagner corporation adjusted the valuation of all assets and liabilities to reflect changes in the purchasing power of the dollar.spooner oil company changed its method of accounting for oil and gas exploration costs from successful efforts to full cost. no mention of the change was included in the financial statements. the change had a material effect on spooner's financial statements.cypress manufacturing company purchased machinery having a five-year life. the cost of the machinery is being expensed over the life of the machinery.rudeen corporation purchased equipment for $180,000 at a liquidation sale of a competitor. because the equipment was worth $230,000, rudeen valued the equipment in its subsequent balance sheet at $230,000.davis bicycle company received a large order for the sale of 1,000 bicycles at $100 each. the customer paid davis the entire amount of $100,000 on march 15. however, davis did not record any revenue until april 17, the date the bicycles were delivered to the customer.gigantic corporation purchased two small calculators at a cost of $32.00. the cost of the calculators was expensed even though they had a three-year estimated useful life.esquire company provides financial statements to external users every three years.