In 2018, Beta Corporation earned gross profits of $720,000.a. Suppose that Beta was financed by a combination of common stock and $1.14 million of debt. The interest rate on the debt was 8%,and the corporate tax rate in 2018 was 21 %. How much profit was available for common stockholders after payment of interest andcorporate taxes? (Do not round intermediate calculations. Enter your answer in dollars not millions and round your answer to thenearest whole dollar amount.)Profit available to common stockholders

Calculation of net profits:Excel spreadsheet:

Answered: In 2018, Beta Corporation earned gross…

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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Assume that a company borrows at a cost of 0.08. Its tax rate is 0.35. What is the minimum after-tax cost of capital for a certain cash flow if a. 100 percent debt is used? b. 100 percent common stock? (assume that the stockholders will accept 0.08)
At the end of 2Q2018 (June 2018) Tesla, Inc. (TSLA) had $3.9 billion in common equity, $11.6 billion in debt, and no preferred equity. Tesla Inc. had an estimated WACC of 7.55%, an estimated effective rate on debt of 5.85%, and you may assume a tax rate of 21%. Image that the Board of Directors had replaced CEO Elon Musk with you. How much return do your TSLA equity investors expect? 16.24 percent 420.00 percent 19.36 percent 41.28 percent 9.33 percent
A company just issued $351000 of perpetual 8% debt and used the proceeds to repurchase stock. The company expects to generate 123000 of EBIT in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firm’s unlevered cost of capital is 15% and the tax rate is 35%. Use FTE to calculate the value of the company’s equity.
Baker Industries’ net income is $24000, its interest expense is $4000, and its tax rate is 45%. Its notes payable equals $24000, long-term debt equals $70000, and common equity equals $240000. The firm finances with only debt and common equity, so it has no preferred stock. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet. What are the firm’s ROE and ROIC? Round your answers to two decimal places. Do not round intermediate calculations. ROE fill in the blank % ROIC fill in the blank %
An analyst's calculation of Bear Corporation's enterprise value is $3.2 billion. Bear has $389 million in cash, $750 million in debt, and 35 million shares outstanding. What is this analyst's valuation of one share of Bear Corp's stock? Enter your answer in dollars and round to the nearest cent. Do not include the dollar sign ($).
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Picollo had after tax earnings of P5,000,000 in 2014. The company needs P5,000,000 for new investments and plans to finance 70% of those investments with debt. If Picollo follows a residual a dividend policy, what total dividend will be paid? *
Baker Industries' net income is $21,000, its interest expense is $4,000, and its tax rate is 25%. Its notes payable equals $27,000, long-term debt equals $80,000, 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. 8.75 % ROE: ROIC: %
Baker Industries' net income is $27, 000, its interest expense is $4,000, and its tax rate is 25%. Its notes payable equals $27, 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.
Yo
DuPont reports in a recent balance sheet $598 million of 5.25 percent notes payable due in 2016.The company’s income tax rate is approximately 19 percent.a. Compute the company’s after-tax cost of borrowing on this bond issue stated as a total dollaramount.b. Compute the company’s after-tax cost of borrowing on this bond issue stated as a percentageof the amount borrowed.c. Describe briefly the advantage of raising funds by issuing bonds as opposed to stocks.
Additional Information: (a) Gross profit rate for 2019 is 50%, which decreased by 5% in 2020 due to increase in cost to produce their products. (b) Income tax rate is 40%. What is the operating expense in 2020? ₱525,000 ₱183,333 ₱126,923 ₱150,000

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