Haricot Corporation and Pinto Corporation both have operating profits of $165 million. Haricot is financed solely by equity, while Pintohas issued $215 million of 6% debt. If the corporate tax rate is 21%:Required:a. How much tax does each company pay?b. What is the total payout to investors (debtholders plus shareholders) of each company?Answer is complete but not entirely correct.Complete this question by entering your answers in the tabs below.Required ARequired BHow much tax does each company pay?Note: Enter your answer in dollars not in millions.Tax AmountHaricotPinto$21 x$21 x< Required ARequired B > What is the total payout to investors (debtholders plus shareholders) of each company?Note: Enter your answers in million rounded to 2 decimal places.HaricotReturn to debtholdersReturn to shareholders$ 34,650,000.0Pinto$34,650,000.00million$$165,000,000.00× million165,000,000.00$$Total return to investorsmillion199,650,000.00199,650,000.00

Financing refers to the methodology of raising money or capital by a business using various forms…

Haricot Corporation and Pinto Corporation both have operating profits of $165 million. Haricot is financed solely by equity, while Pinto has issued $215 million of 6% debt. If the corporate tax rate is 21%: Required: a. How much tax does each company pay? b. What is the total payout to investors (debtholders plus shareholders) of each company?

Haricot Corporation and Pinto Corporation both have operating profits of $165 million. Haricot is financed solely by equity, while Pinto has issued $215 million of 6% debt. If the corporate tax rate is 21%: Required: a. How much tax does each company pay? b. What is the total payout to investors (debtholders plus shareholders) of each company?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Companies U and L are identical in every respect except that U is unlevered while L has $20 million of 8% bonds outstanding. Assume: (1) All of the MM assumptions are met. (2) Both firms are subject to a 25% federal-plus-state corporate tax rate. (3) EBIT is $3 million. (4) The unlevered cost of equity is 12%. What is rs for Firm U?
Need sum help
Lannister Manufacturing has a target debt-equity ratio of .85. Its cost of equity is 10 percent, and its cost of debt is 7 percent. If the tax rate is 23 percent, what is the company's WACC? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC
Barclay Corp is operating in a country K where the corporate tax is 40%, personal income tax on bond investment is 25% while the personal tax on stock is 29%. Assume the firm’s earnings before interest and taxes is $5,400,000 and cost of equity with zero debt is 9%. (Please Show Work) If Barclay current has $12 million total market value of debt financing, what would be the market value of the company of Barclay Corp in this country K?(Please Show Work) What is the proportion of debt (wd) and equity (ws) financing for Barclay Corp with financial leverage? (Please Show Work)
Byrd Enterprises has no debt. Its current total value is $47.2 million. Assume the company sells $18.5 million in debt. Ignoring taxes, what is the debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Assume the company’s tax rate is 21 percent. What is the debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Mars Corporation has Revenues of $50 million, Tax Expense of $5 million, total Other Expenses of $15 million, and Net Income of $30 million. What is Mars Corporation's income tax RATE? 25.0% 10.0% 14.3% 16.7%
A company finances its operations and growth opportunities, using common equity and debt. The debt-to-equity ratio of the CI Corp. is 0.3. If its cost of equity is 14%, and its pretax cost of debt is 5%, what comes closest to the company’s WACC? The tax rate is 21%. 6.7% 4.5% 7.1% 6.3% 5.8% The answer is not 7.1%
Baker Industries' net income is $24,000, its interest expense is $4,000, and its tax rate is 25%. Its notes payable equals $24,000, long-term debt equals $75,000, and common equity equals $240,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm's ROE and ROIC? Do not round intermediate calculations. Round your answers to two decimal places. ROE: ROIC: 10 Hide Feedback Partially Correct
Baker Industries' net income is $27,000, its interest expense is $5,000, and its tax rate is 25%. Its notes payable equals $26,000, long-term debt equals $75,000, and common equity equals $250,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm's ROE and ROIC? Do not round intermediate calculations. Round your answers to two decimal places. ROE: ROIC: % %
Duffert Industries has total assets of $970, 000 and total current liabilities (consisting only of accounts payable and accruals) of $115,000. Duffert finances using only long-term debt and common equity. The interest rate on its debt is 9% and its tax rate is 25%. The firm's basic earning power ratio is 17% and its debt - to capital rate is 40% What are Duffert's ROE and ROIC? Do not round your intermediate calculations. Group of answer choices a. 12.68%; 14.03% b.13.63%; 14.46% с 10.90%; 12.44% d. 15.54%; 16.06% e. 8.86%; 12.73%