Answered: EBIT of a company is 80,000 OMR and… | bartleby

Survey of Accounting (Accounting I)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

See similar textbooks

Related questions

Question

Full solution please

EBIT of a company is 80,000 OMR and Interest payable is 20,000 OMR. Calculate the Financial leverage ?

a.

1.33

b.

4

c.

0.4

d.

None of these

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Blurred answer

Similar questions

Full solution please If the Contribution is 50,000, EBIT is 30,000 and interest is 10,000 calculate Combined Leverage ? a. 2.5 b. 0.66 c. 0.4 d. 1.67
EBlT = 4, 00, 000 Fixed * cos t = 6, 00, 000 Interest = 80, 000 Combined leverage = ? a. 3.12 O b. Sufficient data is not given OC. 3.125 O d. 3.215
Choose the correct letter and pls provide the solution thanks A firm’s current assets and current liabilities are P1,600.00 and P1,000.00 respectively. How much can it borrow, in a maximum, and on a short-term basis without reducing the current ratio below 1.25? *a. P2,500.00b. P1,000.00c. P1,400.00d. P3,600.00e. P3,500.00
Please do not give solution in image format thanku
Please don't give image format and no chatgpt answer
3. Indicate on this sheet how you know that this proforma has positive or negative financial leverage and positive or negative operating leverage. Show your work. Before tax cash flows Office Example GENERAL DATA BUILDING DATA Purchase Price Loan % $9,000,000.00 75.00% Bldg RSF 100000 Reversion Data Going Out OE/RSF $8.00 Cap Rate 10.50% Loan Amount $6,750,000.00 Rents PSF $18.00 Interest Rate/yr 9.50% Monthly Constant (Rm) 0.0079167 INITIAL EQUITY Investors Discount Rate Term/years 25 Price $9,000,000.00 15.00% Term/months 300 Loan $6,750,000.00 Monthly PMT $58,975 Initial Investment $2,250,000.00 Annual DS $707,694 Before Tax CASH FLOWS Potential Gross Income Year 1 $1,800,000 Year 2 $1,890,000 Year 3 $1,984,500 Year 4 $2,083,725 Year 5 $2,187,911 Year 6 $2,297,307 Vacancy & Credit Losses Other Income Effective Gross Income Operating Expenses Net Operating Income $90,000 $94,500 $0 $0 $99,225 $0 $104,186 $0 $109,396 $0 $114,865 $0 $1,710,000 $1,795,500 $1,885,275 $1,979,539…
Net Present Value Method, Present Value Index, and Analysis for a service company
Part AUsing the following free cash flows and cost of equity = 7%, discount FCF year 1 back to time 0 (today). FCF year 1 = 500; FCF year 2 = 520; FCF year 3 = 560; FCF year 4 = 590; FCF year 5 = 610 a) 429.36 b) 467.29 c) 512.85 d) 422.10Part B Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, discount the year 4 expected payment back to time 0 (today). Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 a) 9.31 b) 10.11 c) 13.65 d) 6.50
Which of the following calculations is correct if sales are $25,000, operating profit after tax is $1,000, the tax rate is 30%, there are no ‘other comprehensive income’ items, operating liabilities (OL) are $5,000, the short-term borrowing rate (STBC) is 3% after tax, and the asset turnover ratio (ATO) is 2? 1. Operating liability leverage (OLLEV) = 0.286 2. RNOA = 0.092 3. RNOA = 0.066 4. Operating profit margin after tax = 0.046
Residual Income = $23000 Operating income = 35,844 Cost of Capital = 12% What is return on investment? Don't round any intermediate calculations. Enter your answer to one decimal place. Do not use commas, percentage or dollar signs.
Consider the following information for Nathan Ltd.: EBIT- Rs.1120 Lakhs, EBT- Rs.320 Lakhs, Fixed Cost- Rs.700 Lakhs Calculate Financial Leverage a. 3.5 b. 1.4 c. 2.5 d. 6.3
CALCULATING 3Ms COST OF CAPITAL In this chapter, we described how to estimate a companys WACC, which is the weighted average of its costs of debt, preferred stock, and common equity. Most of the data we need to do this can be found from various data sources on the Internet. Here we walk through the steps used to calculate Minnesota Mining Manufacturings (MMM) WACC. 3. Next, we need to calculate MMMs cost of debt. We can use different approaches to estimate it. One approach is to take the companys interest expense and divide it by total debt (which is the sum of short-term debt and long-term debt). This approach only works if the historical cost of debt equals the yield to maturity in todays market (i.e., if MMMs outstanding bonds are trading at close to par). This approach may produce misleading estimates in years in which MMM issues a significant amount of new debt. For example, if a company issues a great deal of debt at the end of the year, the full amount of debt will appear on the year-end balance sheet, yet we still may not see a sharp increase in annual interest expense because the debt was outstanding for only a small portion of the entire year. When this situation occurs, the estimated cost of debt will likely understate the true cost of debt. Another approach is to try to find this number in the notes to the companys annual report by accessing the companys home page and its Investor Relations section. Alternatively, you can go to other external sources, such as bondsonline.com, for corporate bond spreads, which can be used to find estimates of the cost of debt. Remember that you need the after-tax cost of debt to calculate a firms WACC, so you will need MMMs tax rate (which has averaged around 30% in recent years). What is your estimate of MMMs after-tax cost of debt?

SEE MORE QUESTIONS

Recommended textbooks for you

Survey of Accounting (Accounting I)

Survey of Accounting (Accounting I)

Accounting

ISBN:

9781305961883

Author:

Carl Warren

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Corporate Fin Focused Approach

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Survey of Accounting (Accounting I)

Survey of Accounting (Accounting I)

Accounting

ISBN:

9781305961883

Author:

Carl Warren

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Corporate Fin Focused Approach

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Fundamentals of Financial Management (MindTap Cou…

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781285867977

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS