Earnings this year for Plasti-tech Inc.were $200,000, of which $60,000 it decided to plow back and 10 % was depreciation.Plasti-tech's internally generated funds are:

Question

Quizplus · Accepted Answer

Internally generated funds refer to the amount of money that a company can generate from its own operations, without external financing. To calculate Plasti-tech's internally generated funds, we need to start with the earnings and make adjustments for the portion that was reinvested (plowback) and the depreciation expense.

Starting with earnings of $200,000, we subtract the plowback of $60,000, which leaves us with $140,000. We then add back the depreciation expense of $20,000 (10% of $200,000), which gives us $160,000 in internally generated funds.

Therefore, the correct answer is C) $80,000.

Earnings This Year for Plasti-Tech Inc