Last year, your company had sales of $11,010,980. The firm's costs of goods sold amounted to 60% of sales. The firm also paid cash operating expenses of $1,000,000, and had $173,511 in depreciation expense. The firm had $450,000 in 9% coupon bonds outstanding and paid $40,000 in dividends to its common stockholders. Also, the firm received $100,000 in dividend income from its holdings of other common stocks. Compute the corporation's taxable income i.e. earnings before taxes. SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO THE NEAREST WHOLE NUMBER AT THE END. DO NOT ENTER THE $ SIGN SYMBOL..i.e. if your answer is 1,000,000 enter it as 1,000,000.

Last year, your company had sales of $11,010,980. The firm's costs of goods sold amounted to 60% of sales. The firm also paid cash operating expenses of $1,000,000, and had $173,511 in depreciation expense. The firm had $450,000 in 9% coupon bonds outstanding and paid $40,000 in dividends to its common stockholders. Also, the firm received $100,000 in dividend income from its holdings of other common stocks. Compute the corporation's taxable income i.e. earnings before taxes. SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO THE NEAREST WHOLE NUMBER AT THE END. DO NOT ENTER THE $ SIGN SYMBOL..i.e. if your answer is 1,000,000 enter it as 1,000,000.

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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Futuristic Development (FD) generated $2 million in sales last year with assets equal to $5 million. The firm operated at full capacity last year. According to FD's balance sheet, the only current liabilities are accounts payable, which equals $460,000. The only other liability is long-term debt, which equals $730,000. The common equity section is comprised of 500,000 shares of common stock with a book value equal to $3 million and $810,000 of retained earnings. Next year, FD expects its sales will increase by 22 percent. The company's net profit margin is expected to remain at its current level, which is 16 percent of sales. FD plans to pay dividends equal to $0.60 per share. It also plans to issue 70,000 shares of new common stock, which will raise $460,000. Estimate the additional funds needed (AFN) to achieve the forecasted sales next year. Round your answer to the nearest dollar.
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 10%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,183. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Cash Assets Accounts receivable Inventories Liabilities And Equity $ 120 Accounts payable and accruals $ 10 53 240 360 Short-term debt Long-term debt 1,130 30 Plant and equipment, net Total assets 2,160 $2,880 Common equity Total liabilities and equity 1,687 $2,880 Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places. %
Russell’s has annual revenue of $387,000 with costs of $216,400. Depreciation is $48,900 and the tax rate is 30 percent. The firm has debt outstanding with a market value of $182,000 along with 9,500 shares of stock that is selling at $67 a share. The firm has $48,000 of cash of which $29,500 is needed to run the business. What is the firm’s EV/EBITDA ratio? a, 5.57 b. 4.69 c. 3.39 d. 3.93 e. 6.20
Gibson Company sales for the Year 1 were $2 million. The firm’s variable operating cost ratio was 0.45, and fixed costs (that is, overhead and depreciation) were $700,000. Its average (and marginal) income tax rate is 40 percent. Currently, the firm has $2.4 million of long-term bank loans outstanding at an average interest rate of 13.0 percent. The remainder of the firm’s capital structure consists of common stock (140,000 shares outstanding at the present time). Calculate Gibson’s degree of combined leverage for Year 1. Round your answer to two decimal places. Gibson is forecasting a 8 percent increase in sales for next year (Year 2). Furthermore, the firm is planning to purchase additional labor-saving equipment, which will increase fixed costs by $130,000 and reduce the variable cost ratio to 0.430. Financing this equipment with debt will require additional bank loans of $400,000 at an interest rate of 13.0 percent. Calculate Gibson’s expected degree of combined leverage for…
A company has $20 billion of sales and $1 billion of net income. Its total assets are $10 billion. The company’s total assets equal total invested capital, and its capital consists of half debt and half common equity. The firm’s interest rate is 5% and its tax rate is 40%. Use this as a guide for computing EBIT (work up the firm's income statement): EBIT Less: Interest EBT Less: Taxes Taxes (40%) Net Income Question: What is its ROIC?
Griffins Goat Farm, Inc., has sales of $670,000, costs of $332,000, depreciation expense of $76,000, interest expense of $48,000, a tax rate of 23 percent, and paid out $45,000 in cash dividends. The firm has 27,800 shares of common stock outstanding. a. What are the earnings per share figure? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What are the dividends per share figure? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Earnings per share b. Dividends per share
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Marine Outlets, Inc. had $ 14 million in sales last year, COGS of $ 8 million, depreciation expense of $ 2 million, $ 1 million in interest payments on long-term debt. If the firm's “tax rate” is 35%, how much is the Firm's Net Income?
Colorado Company has equity of $4,000,000 and a net income of $150,000. It has a payout ratio of 25% and a return on assets of 12%. How much did Colorado pay in cash dividends, and what were its average assets?
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Based on the corporate valuation model, the value of Virtual Homes Co.'s operations is $1.15 billion. The company's balance sheet shows $50 million in accounts receivable, $77 million in inventory, and $215 million in cash and marketable securities. The balance sheet also shows $95 million in accounts payable, $165 million in notes payable, $470 million in long-term debt, $85 million in preferred stock, $281 million in retained earnings, and $705 million in total common equity. If Virtual Homes has 50 million shares of common stock and 10 million shares of preferred stock outstanding, what is the best estimate of the common stock's price per share? $12.90 O $64.50 $7.28 $15.44 $13.54

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