P13 -21 Agency Costs and Capital Structure Galaxy Enterprises has earnings before interest and taxes of $9 million of debt outstanding with a required rate of return of 7.3 %. The required rate of return on assets in the industry is 12%. The corporate tax rate is 21 %, but there are no personal taxes. The present value of Galaxy's bankruptcy costs is $18 million. Compute Galaxy's firm value. Please show all the steps of how you get to the answer.
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- Excel Online Structured Activity: Income and Cash Flow Analysis The Berndt Corporation expects to have sales of $11 million. Costs other than depreciation are expected to be 80% of sales, and depreciation expected to be $1.1 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt. 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 a. Set up an income statement. What is Berndt's expected net cash flow? 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. $ b. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What is Berndt's expected net cash flow? Round your answer to the nearest…Given are the following data for year 1:Revenue = $45 million; Variable cost = $10 million; Fixed cost = $5 million; Depreciation = $1 million; Interest expense = $3 million; Capital expenditure = $12 million; Change in working capital = $2 million. Corporate tax rate is 30%. Calculate the free cash flow to firm (FCFF) for year 1: a. $4.2 million b. $6.3 million c. $7.3 million d. $5.2 millionUse the following information for Smith Brothers, Inc: EBIT / Revenue 15.00% Government Tax Rate 35.00% Revenue / Assets 1.80 times Current Ratio 2.40 times EBT / EBIT 0.80 times Assets / Equity 1.90 times Smith Brothers, Inc.'s return on assets (ROA) is closest to: A. 14.04%. B. 14.82%. C. 24.71%. D. 26.68%.
- 14. Refer to the following financial information of Scholz Company: NOPAT 8,250,000.00 EBITDA 17,725,000.00 Net Income 5,050,000.00 Capital Expenditures 6,820,000.00 After tax capital costs 6,280,000.00 Tax rate 40% Refer to Scholz Company, calculate its interest expense. Use 2 decimal places for your final answer.Based on the following information, what is the company's Unlevered FCF for the period: EBIT of $500 mm, tax rate of 20%, Depreciation and Amort of $200 mm, Capex of $250 mm and an investment of $50 mm in Net Working Capital. a. $500 mm b. $300 mm c. $650 mm d. $225 mm Please answer fast i give you upvote.Consider the following data for the firms Acme and Apex: Acme Apex Required: Equity Debt ($ million) ($ million) 210 1,050 105 350 ROC Cost of Capital (*) (%) 17% 9% 15% 10% a-1. Calculate the economic value added for Acme and Apex. a-2. Which firm has the higher economic value added? b-1. Calculate the economic value added per dollar of invested capital for Acme and Apex. b-2. Which firm has the higher economic value added per dollar of invested capital? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Calculate the economic value added for Acme and Apex. Note: Enter your answers in millions rounded to 2 decimal places. Economic value added for Acme million Economic value added for Apex million
- Consider the following data for the firms Acme and Apex: Equity ($ million) Debt ($ million) ROC Cost of Capital Acme 290 145 17% 9% Apex 1,450 483 15% 10% a. Calculate the economic value added for Acme and Apex (round to 2 decimal places). Economic value added for Acme $? million Economic value added for Apex $? million b. Calculate the economic value added per dollar of invested capital for Acme and Apex (round to 2 decimal places)? Economic value added for Acme per dollar Economic value added for Apex per dollarUse the following information to answer this question. Total assets Total current liabilities Total expenses Total liabilities Total revenues Tax rate $150,000 105,000 70,000 110,000 80,000 40% After -tax cost of capital 12% Invested capital is defined as total assets less total liabilities. (round your answers te one decimal ) Capital turnover equal O A) 53.3% B) 2 OC) 6.7% D) 28.6%Gabbert’s Corporation expects to have sales of $15 million. Costs other than depreciations are expected to be 77% of sales, and depreciation is expected to be $1.8 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. The federal tax rate is 25%. Interest expense is $210,000. 1. Set up an income statement. What is Gabbert’s expcted net income? Its expected net cash flow? 2. Suppose Congress changed the tax laws so that Gabbert’s depreciation expenses went up by 60%. No changes in operations occurred. What would happen to the reported profit and to net cash flow? 3. Now suppose that Congress changed the tax laws such that, instead of increasing Gabbert’s depreciation, it was reduced by 60%. How would the profit and the net cash flow be affected? 4. If this were your company, would you prefer Congress to cause your depreciation expense to be increased or reduced? Why?
- u are given the following information concerning a firm: sets required for operation: $5,700,000 evenues: $8,600,000 berating expenses: $8,100,000 come tax rate: 40%. anagement faces three possible combinations of financing: 1. 100% equity financing 2. 35% debt financing with a 5% interest rate 3. 70% debt financing with a 5% interest rate a. What is the net income for each combination of debt and equity financing? Round your answers to the nearest dollar. 1 Net income $ 2 3 $ b. What is the return on equity for each combination of debt and equity financing? Round your answers to one decimal place. Return on equity 1 2 3 % % % c. If the interest rate had been 10 percent instead of 5 percent, what would be the return on equity for each combination of debt and equity financing? Round your answers to one decimal place. Return on equity 1 2 3 % % % d. What is the implication of the use of financial leverage when interest rates change? The use of financial leverage is likely to -Select- the…Jannah Company has sales of P1,000,000, cost of goods sold of P700,000, depreciation expenses of P250,000 and interest expenses of P55,000. If Jannah's tax rate is 34% and the income statement is complete, what is Jannah's operating cash flow? A. P246,700 B. P283,000 C. P33,000 D. P300,000Data for the wholesale products division of ABC Co. are as follows: Earnings before interest and taxes P30,000,000; Depreciation expense P10,000,000; Interest Expense P1,000,000; Change in net working capital P5,000,000; Capital expenditures P4,000,000; Invested capital P50,000,000; Weighted average cost of capital 10%; Tax rate 30%. Considering the impact of income tax, the economic value added by the division must be nearest to P15,300,000 P16,000,000 P16,300,000 P25,000,000 P30,000,000