Lauryn's Doll Company had EBIT last year of $41 million, which is net of a depreciation expense of $4.1 million. In addition, Lauryn'smade $4 million in capital expenditures and increased net working capital by $2.0 million. Assume that Lauryn's has a reported equitybeta of 1.4, a debt-to-equity ratio of 0.4, and a tax rate of 21 percent. What is Lauryn's FCF for the year?Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.FCFmillion

EBIT = $41 millionDepreciation expenses = $4.1 millionCapital expenditure = $4 millionIncreased net…

Answered: Lauryn's Doll Company had EBIT last…

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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The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 8%, 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 $1,201. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Liabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 51 Inventories 360 Long-term debt 1,150 Plant and equipment, net 2,160 Common equity 1,669 Total assets $2,880 Total liabilities and equity $2,880 Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places. %
RJS generated $65,000 net income this year. The firm's financial statements also show that its interest expense was $80,000, its marginal tax rate was 35 percent, and its invested capital was $1,200,000. If its average cost of funds is 14 percent, what was RJS's economic value added (EVA) this year? Round your answer to the nearest dollar. Use a minus sign to enter a negative value, if any.
DataDyne Company reported EBIT of $590 million for the most recent fiscal year. Interest expense were $10 million and the current tax rate was 20%. The firm had depreciation expenses of $100 million and capital expenditures of $150 million. In addition, the firm did have a decrease in net working capital of $30 million. What is DataDyne's free cash flow?
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. %
XYZ anticipates earning $1,500,000 and paying $300,000 in dividends this year. XYZ's capital structure is 20% debt and 80% equity and its tax rate is 35%. Compute the equity breakpoint to the nearest dollar. Your Answer:
Company DotThrive reported the following financial results. Operating income is $94.98 million and depreciation and amortization is $6.12 million. The company spent $13.99 million buying new equipment and sold $3.58 million old equipment (this is the after-tax salvage). Net working capital increased by $1.31 million from previous year. The company's tax bracket is 21%. What's the company's Free Cash Flow (FCF) for the year?
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?
Lauryn's Doll Company had EBIT last year of $58 million, which is net of a depreciation expense of $5.8 million. In addition, Lauryn's made $6.3 million in capital expenditures and increased net working capital by $2.5 million. Assume that Lauryn's has a reported equity beta of 1.9, a debt-to-equity ratio of 0.6, and a tax rate of 21 percent. What is Lauryn's FCF for the year? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. FCF million
RJS generated $78,000 net income this year. The firm's financial statements also show that its interest expense was $40,000, its marginal tax rate was 35 percent, and its invested capital was $1,000,000. If its average cost of funds is 11 percent, what was RJS's economic value added (EVA) this year? Round your answer to the nearest dollar. Use a minus sign to enter a negative value, if any. $ _______
Calculating Weighted Average Cost of Capital and Economic Value Added (EVA) Ignacio, Inc., had after-tax operating income last year of $1,197,000. Three sources of financing were used by the company: $2 million of mortgage bonds paying 4 percent interest, $5 million of unsecured bonds paying 6 percent interest, and $10 million in common stock, which was considered to be relatively risky (with a risk premium of 8 percent). The rate on long-term treasuries is 3 percent. Ignacio, Inc., pays a marginal tax rate of 30 percent. Required: 1. Calculate the after-tax cost of each method of financing. Enter your answers as decimal values rounded to three places. For example, 4.36% would be entered as ".044".
Target Corporation (TGT) has $2.14 million in assets that are currently financed with 100% equity. TGT’s EBIT is $385,000, and its tax rate is 25%. If TGT changes its capital structure to include 50% debt, its return on equity will increase. Assume the interest rate on debt is free. (justify your answer with numerical calculation) True False

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