Acer Systems, a manufacturer of gaming consoles, has $5,520,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,340,000 1,840,000 2,340,000 $5,520,000 Short-term rates are 5 percent. Long-term rates are 7.5 percent. (Note that long-term rates imply a return i Earnings before interest and taxes are $1,130,000. The tax rate is 25 percent. Assume the term structure c becomes inverted, with short-term rates going to 10 percent and long-term rates 5 percentage points loww rates. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of she what will earnings be after taxes? For an example of perfectly hedged plans.see Figure 6-8 Earning after taxes

Acer Systems, a manufacturer of gaming consoles, has $5,520,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,340,000 1,840,000 2,340,000 $5,520,000 Short-term rates are 5 percent. Long-term rates are 7.5 percent. (Note that long-term rates imply a return i Earnings before interest and taxes are $1,130,000. The tax rate is 25 percent. Assume the term structure c becomes inverted, with short-term rates going to 10 percent and long-term rates 5 percentage points loww rates. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of she what will earnings be after taxes? For an example of perfectly hedged plans.see Figure 6-8 Earning after taxes

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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USE INFORMATION FOR QUESTION 35 and 36. Provo, Inc., had revenues of $10 million, cash operating expenses of $5 million, and depreciation and amortization of $1 million during 2020. The firm purchased $500,000 of equipment during the year while increasing its inventory by $300,000 (with no corresponding increase in current liabilities). The marginal tax rate for Provo is 40 percent. TOOL: Revenue - Operating Ex EBITDA - D&A EBIT - Taxes NOPAT + D&A CF Opns - Capital Expenditures + Add WC = FCF
Graff, Incorporated, has sales of $55,000, costs of $25,000, depreciation expense of $2,750, and interest expense of $2,500. If the tax rate is 23 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Operating cash flow
Property, in the form of unimproved land, is purchased at a cost of $8000 and is held for 6 years, at which time it is sold for $32,600. Each during the six years of ownership $220 is paid in property tax and may be accounted for at an interest of 12%. The income tax rate on the longterm capital gain is 15% of the gain. Inflation during the period is 4% per year. What is the annual rate of return for this investment?
Edwards Electronics recently reported $15,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 25%. How much was its net operating profit after taxes (NOPAT)? Select the correct answer. a. $6,324.00 b. $6,349.50 Oc$6,273.00 O d. $6,298.50 e. $6,375.00
Pop Evil, Incorporated's, net income for the most recent year was $10, 114. The tax rate was 22 percent. The firm paid $3,455 in total interest expense and deducted $2,104 in depreciation expense. What was the cash coverage ratio for the year? Multiple Choice 6.43 times 5.36 times 6.86 times 10.36 times 5.16 times
Colter Steel has $4,550,000 in assets. Temporary current assets $ 1,100,000 Permanent current assets 1,505,000 Fixed assets 1,945,000 Total assets $ 4,550,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 13 percent and long-term rates 2 percentage points lower than short-term rates. Earnings before interest and taxes are $970,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?
2. For the year 2021, Rattner Robotics had $5 million in operating income (EBIT). Its depreciation expense was $1.5 million, its interest expense was $1 million, and its corporate tax rate was 35%. At the end of year 2021, it had $10 million in operating current assets, $3 million in accounts payable, $1 million in accruals, and $2 million in notes payable. Assume Rattner has no excess cash and no other current liabilities. Assume that Rattner's only noncash item was depreciation. a) What was the company's net income for the year 2021?tion bona 158 b) What was its net operating working capital (NOWC) for the year 2021? c) Rattner reported $4 million in capital expenditure for the year of 2021. Rattner's NOWC for the prior year (year 2020) is $5.5 million. What is the company's free cash flow (FCF) for the year of 2021? (Hint: you need your results from part b to calculate this question).
This is a multiple answer question. Babcock Company just completed its first year of operations and has a net operating loss for tax purposes of $100,000. Babcock expects to be profitable within the next two years. The enacted tax rate is 40%. Which of the following components are included in the journal entry to record the NOL carryforward? (Choose all that apply) A. credit taxes payable $40,000 B. debit income tax expense $40,000 C. credit income tax expense $40,000 D.debit deferred tax asset $40,000 E. credit deferred tax liability $40,000
he Wendt Corporation reported $30 million of taxable income. Its federal tax rate was 21% (ignore any possible state corporate taxes). What is the company's federal income tax bill for the year? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. $ Assume the firm receives an additional $4 million of interest income from some bonds it owns. What is the additional tax on this interest income? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. $ Now assume that Wendt does not receive the interest income but does receive an additional $4 million as dividends on some stock it owns. Recall that 50% of dividends received are tax exempt. What is the additional tax on this dividend income? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer…
Nicholas Health Care Systems recently reported an EBITDA of $31.0 million and net income of $15.8 million. It had $4.0 million of interest expense, and its federal tax rate was 21% (ignore any possible state corporate taxes). What was its charge for depreciation and amortization? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.
During the year, Pharr Corporation had sales of $459,000. Costs were $388,000 and depreciation expense was $102,800. In addition, the company had an interest expense of $79.250 and a tax rate of 21 percent. What is the operating cash flow for the year? Ignore any tax loss carry-forward provisions. Multiple Choice $72,733 $77,768 O $15,071
Hailey, Inc., has sales of $24200, costs of $8800, depreciation expense of $2600, and interest expense of $1800. Assume the tax rate is 36 percent. What is the operating cash flow, or OCF? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

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