"The S&H Construction Company expects to have total sales next year totaling $ 14 comma 700 comma 000. In addition, the firm pays taxes at 35 percent and will owe $ 290 comma 000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 63 percent of sales and operating expenses will total 30 percent. What is your estimate of the firm's net income (after taxes) for the coming year?"

$480,350

Explanation:

Income is calculated by deducting expenses from the sales which includes the Cost of Goods sold.

The Cost of Goods sold is given to be 63% of the Sales Next year and the Operating Expenses are given to be 30% of the sales.

That means a total of,

= 63 + 30

= 93%

93% of the sales will be deducted from the sales as expenses.

$290,000 will also be owed as interest so needs to be removed from the sales as well.

Calculating that will give,

= 14,700,000 - 14,700,000(0.93) - 290,000

= 14,700,000 - 13,671,000 - 290,000

= $739,000

This is the income after interest and expenses.

Now the tax has to be accounted for.

With a tax rate of 35%, the income minus tax will be,

= 739,000 ( 1 - 0.35)

= 739,000 * 0.65

= $480,350

$480,350 is the after-tax estimate if income for the following year.

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