Frye, inc., has sales of $625,000, costs of goods sold of $260,000, depreciation expense of $79,000, interest expense of $43,000, and an average tax rate of 35 percent. if the firm's beginning balance in retained earnings for the year was $200,000 and paid out $60,000 in cash dividends, how much is the firm's ending balance in retained earnings for the year?

Ending RE : 297,950

Explanation:

Sales               625,000

COGS             (260,000)

Dep Expense   (79,000)

Interest Exp      (43,000)

EBT                   243,000

Tax Expense    (85,050)

Net Income       157,950‬

beginning retained earning      200,000

+ net income                                157,950

- dividends                                 (60,000)  

ending RE                                    297,950

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20