The following table shows an abbreviated income statement and balance sheet forMcDonald's Corporation for 2012.INCOME STATEMENT OF MCDONALD'S CORP.,2012(Figures in $ millions)Net salesCostsDepreciationEarnings before interest and taxes(EBIT)Interest expensePretax incomeTaxesNet income27,57017,5721,4058,5935208,0732,6205,453 AssetsCurrent assetsCash and marketablesecuritiesReceivablesInventoriesOther current assetsTotal current assetsFixed assetsProperty, plant, andequipmentIntangible assets(goodwill)Other long-term assetsTotal assetsBALANCE SHEET OF MCDONALD'S CORP., 2012(Figures in $ millions)Liabilities and Shareholders'equityCurrent llabilities20122,3391,3781251,0924,93424,6802,8072,98635,40720112,339 Debt due for repayment1,338 Accounts payable120 Total current liabilities6194,416Long-term debt22,838 Other long-term liabilities2,656 Total llabilities3,102 Total shareholders' equity33,012Total liabilities and shareholders'equityIn 2012 McDonald's had capital expenditures of $3,052.a. Calculate McDonald's free cash flow in 2012. (Enter your answer in millions.)Free cash flow$millionmillion20123,4063,40613,6363,0602011b.If McDonald's was financed entirely by equity, how much more tax would the companyhave paid? (Assume a tax rate of 35% on the revised pretax income.) (Do not roundIntermediate calculations. Enter your answer In millions rounded to the nearestwhole number.)Additional tax3763,1463,52212,1372,96020,102 18,61915,305 14,39335,407 33,012

We can compute FCF using the formula below: FC F = Net income + depreciation - increase in working…

In 2012 McDonald's had capital expenditures of $3,052. a. Calculate McDonald's free cash flow in 2012. (Enter your answer in millions.) Free cash flow $ million If McDonald's was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 35% on the revised pretax income.) (Do not round b. Intermediate calculations. Enter your answer In millons rounded to the nearest whole number.) Additional tax LA million

In 2012 McDonald's had capital expenditures of $3,052. a. Calculate McDonald's free cash flow in 2012. (Enter your answer in millions.) Free cash flow $ million If McDonald's was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 35% on the revised pretax income.) (Do not round b. Intermediate calculations. Enter your answer In millons rounded to the nearest whole number.) Additional tax LA million

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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Hartman Motors has $20 million in assets, which were financed with $5 million of debt and $15 million in equity. Hartman's beta is currently 1.3, and its tax rate is 40%. Use the Hamada equation to find Hartman's unlevered beta, bu. Do not round intermediate calculations. Round your answer to two decimal places.
Pelamed Pharmaceuticals has EBIT of $336 million in 2006. In addition, Pelamed has interest expenses of $164 million and a corporate tax rate of 25%. a. What is Pelamed's 2006 net income? b. What is the total of Pelamed's 2006 net income plus interest payments? c. If Pelamed had no interest expenses, what would its 2006 net income be? How does it compare to your answer in part (b)? d. What is the amount of Pelamed's interest tax shield in 2006?
Wilson Company earned $4,000 of cash sales. Sales tax is 6%. Which of the following shows how this event would affect the company's financial statements (ignore the effects of cost of goods sold)? Assets = Liabilities + 4,000 240 240 240 240 a. b. 4,240 C. 4,240 d. 4,240 Multiple Choice Balance Sheet O Option C Option A Option B Option D Stockholders' Equity 3,760 4,000 4,000 4,000 Revenue 3,760 4,000 4,000 4,240 Income Statement Expense n/a n/a n/a n/a = Net Income 3,760 4,000 4,000 4,240 Statement of Cash Flows 3,760 OA 4,240 OA n/a 4,240 OA
Tom Inc. report a $30million of net income. its EBIT is 50millions, the flat tax rate is 25%? What was its interest expense (in million)?
Sara is trying to analyze Henley Company finances but realizes that she was missing the company's net profits after taxes for the current year. Find the company's net profits after tax.ROA = 2.5%Total asset turnover = 0.5COGS = $105,000Gross profit margin = 0.30
Tool Manufacturing has an expected EBIT of $74,000 in perpetuity and a tax rate of 21 percent. The company has $131,500 in outstanding debt at an interest rate of 6.8 percent and its unlevered cost of capital is 13 percent. What is the value of the company according MM Proposition I with taxes? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Company value
Answer the following questions based on the information in the table. Assume a tax rate of 30 percent. For simplicity, assume that the companies have no other liabilities other than the debt shown. (All dollars are in millions.) Earnings before interest and taxes Debt (at 7% interest) Equity a. Calculate each company's ROE, ROA, and ROIC. Note: Round your answers to 1 decimal place. ROE ROA ROIC Atlantic Corporation Pacific Corporation % % % % % % Atlantic Corporation $ 540 $ 310 $ 1,060 Pacific Corporation $ 540 $ 1,640 $ 370
1
Ma4. The difference between LIFO and FIFO valuation methods is $2,500. Given that the corporation pays a 35% tax rate, what is the savings to the organization to use the LIFO method of accounting.
hartman motors has $32 million in assets, which were financed with $8 million of debt and $24 million in equity. Hartman's beta is currently 1.6, and its tax rate is 30%. Use the Hamada equation to find Hartman's unlevered beta, bu. Do not round intermediate calculations. Round your answer to two decimal places.
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…
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