Answered: How much after profit would a…

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

M2 Firm Value Connor Corp. has an EBIT of $535,000 per year that is expected to continue perpetually. The unlevered cost of equity for the company is 13.2 percent, and the corporate tax rate is 21 percent. The company also has a perpetual bond issue outstanding with a market value of $950,000. a. What is the value of the company? b1. The CFO of the company informs the company president that the value of the company is $3.3 million. b2. Is the CFO correct?
13. The following information relates to two companies Alpha plc Beta plc Profit after tax £200,000 £800,000 P/E ratio 16 21 The management of Beta estimate that if they acquire Alpha they could save an after tax cost of £100,000 annually. Additionally, they estimate that the P/E ratio of the new company would be 20. On the basis of these estimates, what is the maximum price that Beta plc should offer for Alpha? A £6.3m B £5.2m C £4.2m D £2.0m
Question 21 Kountry Kitchen has a cost of equity of 12.7 percent, a pretax cost of debt of 5.6 percent, and the tax rate is 23 percent. If the company's WACC is 9.22 percent, what is its debt-equity ratio? O 1.41 O .41 O 1.68 .84 .71
A5 6c DEF Company is comparing three different capital structures. Plan A is an all-equity plan and would result in 1000 shares of stock. Plan B would result in 700 shares of stock and $13,500 in debt. Plan C would result in 800 shares of stock and $9000 in debt. The firm’s EBIT will be $10,000 per year until infinity. The interest rate on the debt is 12%. c. Compute the break-even EBIT that will cause the EPS on Plan C to be equal to the all-equity EPS (Plan A).
Part 1 of 2 Points: 0 of 2 Save Suppose a firm's tax rate is 25%. K a. What effect would a $9.13 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would a $11.35 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.27 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $9.13 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices that apply.) A. A $9.13 million operating expense would be immediately expensed, increasing operating expenses by $9.13 million. This would lead to a reduction in taxes of 25% x $9.13 million = $2.28 million. B. A $9.13 million operating expense would be immediately expensed, increasing operating expenses by $9.13 million. This would lead to an increase in taxes of 25% x $9.13 million = $2.28 million. C.…
Question 6 "Axon Industries needs to raise $250,000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 15%, although Axon's managers believe that 8.5% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 11%.What is the cost (in USDs) to current shareholders of financing the project out of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is $500
devuben
Question 14 General Electric expects a net income next year of $19.53 million, and a free cash flow of $22.47 million. The company has a marginal corporate tax rate of 35%. Suppose General Electric increases its leverage, such that the interest expense of the company rises by $2.6 million. How will net income change? Show your work. 2. For the same increase in interest expense in part (1), how will free cash flow change? Free cash flow will increase by $2.6 million. Free cash flow will increase by less than $2.6 million. Free cash flow will remain the same. Free cash flow will decrease by less than $2.6 million Free cash flow will decrease by $2.6 million
QC 12.
Please answer q no working required

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

	75,000
	62,500
	66,667
	50,000

How much after profit would a corporation need to earn to pay down $50,000 of debt, assuming that the corporate tax rate is 25%? Question 14 options: 75,000 62,500 66,667 50,000