How did you get the 2,200,000 in retained earnings under capital reconstruction? Capitas Reconstvction AlCParticalarAmtParfiularAmtBy Bank (iontiButionfrom Shareholder)To Inventory Alc5000001500000To Plant Alc1000000By Share capital A/C(50 x 50000)To umeconder Account3000002500000Pay ableTo Retained eaning220000040000004000000Revised Sharcholder Fquity2500000Share capitao (So000 Shares of 50 each Par value)"500000Share Pemivm200000Retained Farming ( 2200000 - 2000000)Totae Revised Shareholden Fquity.320000 0

Internal reconstruction is a process which business is being reorganized by reducing the liabilities…

Answered: How did you get the 2,200,000 in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose a corporation can change its depreciation method so that its tax payments will decrease by $5,000 this year but increase by $5,000 next year. Given this change in depreciation method, what do you expect to happen to the value of this company? O The change will decrease the value of the company because investors don't like changes in accounting methods. O The change will increase the value of the company because the value of the cash savings this year exceeds the cost of the cash payments next year. O The change will have no impact on the value of the company because its cash flow over time will be the same. The change will decrease the value of the company because lower tax payments this year result from lower reported income.
b. Now assume that TTC's period of supernormal growth is to last for 5 years rather than 2 years. How would this affect its price, dividend, yield, and capital gains yield? 1. Find the price today. D₂ 2 2 Year Dividend PV of dividends $1.7455 $1.9041 $2.0772 $2.2661 $2.4721 $1.60 10.0% $59.5547+ $70.0197 - P Dividend yield- Dividend yield- Dividend yield $1.60 Part 2. Finding the expected dividend yield. Dividend yield- Dividend yield- Dividend yield- D₁ $1.920 2.74% Short-run g; for Years 1-5 only. Long-run g; for Year 6 and all following years. 10.0% 7.26% $1.92 Part 3. Finding the expected capital gains yield. Cap. Gain yield-Expected return Cap. Gain yield Cap. Gain yield- Cap. Gain yield Expected return Cap. Gain yield Cap. Gain yield 1 $2.30 " 1 P₁ $70.020 105.5048 Terminal value = Ps= Dividend yield 2.74% 3 $2.76 P. 4 $3.32 Dividend yield 5 $3.98 4.2202 c. What will be TTC's dividend yield and capital gains yield once its period of supernormal growth ends? We used the 5 year…
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1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported revenue was $10 million and the reported cost was $9 million. The discount rate is 8%. Mark ALL the CORRECT statements. For this question, profit = revenue - cost. Hint: Apply the Gordon Formula to the profits of the firm. a) If the profit is expected to be constant, the present value of all the company's future profits is $125 million. b) If the profit is expected to grow 3% annually, the present value of all the company's future profits is $20 million. c) If the profit is expected to grow 4% annually, the present value of all the company's future profits is $25.75 million. d) If the profit is expected to grow 6% annually, the present value of all the company's future profits is $50 million. e) If the profit is expected to grow 10% annually, the present value of all the company's future profits is negative.
5. Eagle Products' EBIT is $680, its tax rate is 30%, depreciation is $42, capital expenditures are $82, and the planned increase in net working capital is $48. What is the free cash flow to the firm?
If a firm earns $375 billion in profits for the year and they retain $218 billion, what is the percent retention rate? And If a firm earns $375 billion in profits for the year and they retain $218 billion, what is the percent dividend payout rate?
If you owned a company, would you prefer the market value of its assets to rise $10million or the market value of its liabilities to fall $10million?
PI Equity (PIE) invested in a biotech company (BIO) with $5 million of EBITDA. PIE paid $35 million with 30% financed at a rate of 6% over three years. Assume BIO's EBITDA grows by 10% each year and they exit after three years at a multiple of 12 times EBITDA. What is the return on invested assets, without regard to any tax benefits attributable to interest or amortization? O 2.8x. O 3.5x. 3.7x. O 4.0x.
some of their money in the stock market, which has been fluctuating over time. The projected value of Mr. Brust's assets after t years is t 3+ 2t 2- 3t + 400. Mr. Kelly's projected assets after t years are t 4- t 2.+ 100.How much did each of them invest?
10. Intellus has long-term debt of $5 million, owners' equity of $7.75 million, current assets of $1 million, gross fixed assets of $20 million, and accumulated depreciation of $7 million. What is the firm's net working capital?
Assume a firm has EBAT of $590,000, and no amortization. It is in a 40 percent tax bracket. a. Compute its cash flow. $ 354,000 b. Assume it has $590,000 in amortization. Recompute its cash flow. $ 590,000 c. How large a cash flow benefit did the amortization provide? $T] Cash flow Cash flow Benefit in cash flow
you have developed the following pro forma income statement for your? corporation: it represents the most recent? year’s operations, which ended yesterday. a.if sales should increase by 25 ?percent, by what percent would earnings before interest and taxes and net income? increase? b.if sales should decrease by 25 ?percent, by what percent would earnings before interest and taxes and net income? decrease? q c.if the firm were to reduce its reliance on debt financing such that interest expense were cut in? half, how would this affect your answers to parts a and b?? sales $ 45,750,000 variable costs -22,800,000 revenue before fixed costs $ 22,950,000 fixed costs -9,200,000 ebit $ 13,750,000 interest expense -1,350,000 earnings before taxes $ 12,400,000 taxes (50%) -6,200,000 net income $ 6,200,000

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