estions: Showing15. Broward Manufacturing recently reported the following information:INet income $615,000ROA 10%Interest expense $202,950Accounts payable and accruals $950,000Broward's tax rate is 25%. Broward finances with only debt and common equity, so it has nopreferred stock 40% of its total invested capital is debt, and 60% of its total invested capital iscommon equity. Calculate its basic earning power (BEP), its return on equity (ROE), and itsreturn on invested capital (ROIC).

The formulas used for all the three requirements are as follows:

Answered: 5. Broward Manufacturing recently…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Broward Manufacturing recently reported the following information:Net income $615,000ROA 10%Interest expense $202,950Accounts payable and accruals $950,000Broward’s tax rate is 30%. Broward finances with only debt and common equity, so it hasno preferred stock. 40% of its total invested capital is debt, and 60% of its total investedcapital is common equity. Calculate its basic earning power (BEP), its return on equity(ROE), and its return on invested capital (ROIC).
Duval Manufacturing recently reported the following information: Net income $585,000ROA 6%Interest expense $193,050Accounts payable and accruals $1,000,000Duval's tax rate is 30%. Duval finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).
Broward Manufacturing recently reported the following information: Net income ROA Interest expense $229,710 Accounts payable and accruals $1,000,000 Broward's tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Do not round intermediate calculations. Round your answers to two decimal places. BEP: ROE: ROIC: % % $741,000 8% %
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $615,000 ROA 10% Interest expense $202,950 Accounts payable and accruals $950,000 Broward’s tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).
The Duval Corporation has recently reported the following information: Net income $600,000 ROA 8% Interest expense $225,000 AP and Accruals $1,000,000 The company finances with only debt and common equity, where 40% of its capital comes from debt, while 60% comes from common equity. The applicable corporate tax rate is 35%. Calculate the firm’s basic earning power (BEP) ratio and return on equity (ROE).
The Jacks corporation reported the following:i. Net income $ 840,000.00ii. Accounts payable and accruals $1,270,650.00iii. Interest expense $ 305,000.00iv. Return on asset 16%v. Tax rate 30%As the company’s business analyst, you know that Jacks finances only with debt and equity. 45%of its total invested capital is debt. Calculate and interpret the basic earnings power ratio, thereturn on equity, and the return on invested capital. Please show work
Samuel Corp. provides the following information: EBIT = $386.50 Tax (TC ) = 21% Debt = $700 RU = 10% Question: What is the value of Samuel’s equity?
16. In December 2020, Remal Co. had AED 200 million debt, AED 40 million in operating income, interest expense AED 4 million, AED 450 million in total assests and tax rate 35 percent. The ROA ratio is: ROA= Net Income + Interest exp Total assets.
The most recent financial statements for Mixton, Incorporated, are shown here: INCOME STATEMENT Sales Costs Taxable income Taxes (24%) Net income $ 54,000 Assets 44,200 $9,800 External financing needed 2,352 $ 7,448 Total BALANCE SHEET Debt Equity Total $ 118,900 $ 118,900 $36,300 82,600 $ 118,900 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $3,100 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $62,100. What is the external financing needed? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
9. The Patrick Company's cost of common equity (rs) is 16%, its before-tax cost of debt (ra) is 8%, and its marginal tax rate is 20%. The stock sells at $41 per share and bonds sell at $900 per bond. Assets Cash Account Receivable Inventories $100,000 $300,000 $400,000 Liabilities and Equity Long-term debt (par value-$1000) $2,000,000 Common stock (par value=$1) $200,000 Retained earnings $2,800,000 Plant and equipment, net $4,200,000 Total assets $ 5,000,000 Total liabilities and equity What is Patrick's WACC if it raises capital based on market value capital structure? a. 12.16% $5,000,000 b. 14.56% c. 14.27% d. 12.80% e. 13.88%
The most recent financial statements for Mixton, Incorporated, are shown here: INCOME STATEMENT Sales Costs Taxable income Taxes (22%) Net income $ 52,000 Assets 42,400 $ 9,600 2,112 $ 7,488 Total BALANCE SHEET Debt Equity Total Answer is complete but not entirely correct. External financing needed s 11,990 X $ 115,700 $ 115,700 $ 34,500 81,200 $ 115,700 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $2,900 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $61,360. What is the external financing needed? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
Herring Corporation has opetating income of$250,000and a25%tax rate. The firm las short-term debt of$101,000, . Long-term debt of$338,000, and common equity of$439,000. What is its retum on invested capital? a.28.475 b.34.72×1 c.24.130 d.4271 K e.2136%

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