Problem 9-06 Assume Lasher's Kitchen has pretax earnings of $50,000 after depreciation expense of $10,000. If the firm's tax rate is 20 percent, what is its cash flow from operations? Round your answer to the nearest dollar. $

Problem 9-06 Assume Lasher's Kitchen has pretax earnings of $50,000 after depreciation expense of $10,000. If the firm's tax rate is 20 percent, what is its cash flow from operations? Round your answer to the nearest dollar. $

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

See similar textbooks

Related questions

Q: The MoMi Corporation's cash flow from operations before interest and taxes was $4.2 million in the…

A: Free cash flow is the cash flow which is available with the firm to distribute to the shareholders.…

Q: Knowledge Check 01 Wallis Company has an annual depreciation deduction of $50,000. At a tax rate of…

A: Introduction of depreciation as an expense and reduced taxable income:Depreciation expense can have…

Q: QUESTION 5 Your firm has net income of $343 on total sales of $1,360. Costs are $750 and…

A: 5. Net income = $343 Depreciation = $120 Operating cash flow = ? 6. Discount rate = 0.10 Present…

Q: A project will incur $600 in shutdown costs the year after the completion of the project. The tax…

A: Shutdown cost= $600 Tax rate= 30% Value of the after-tax shutdown costs=?

Q: A firm must decide between two designs. Their effective income tax rate is 22%, and MACRS…

A: The annual worth is calculated using the following formula:- Annual Worth (AW )=NPVPVAF(r%,n) Step…

Q: llions of dollars): (Click on the following icon in order to copy its contents into a spreadsheet.)…

A: Free cash flow is free money available from the operations of a company after making payments for…

Q: What's the impact on [Cash Flow] if depreciation increases by $10? Assuming the effective tax rate…

A: Solution:Depreciation is a non-cash expense which is incurred by the continuous of asset. It is the…

Q: Problem 9-06 Assume Lasher’s Kitchen has pretax earnings of $150,000 after depreciation expense of…

A: Calculating net profit:

Q: continuing for a total of 3 consecutive years. Calculate the profitability index for the office…

A: The profitability index (PI) is calculated by dividing the present value of future cash flows by the…

Q: Assume a company is going to make an investment of $440,000 in a machine and the following are the…

A: Note: Since you have posted multiple questions, we will solve the first question for you. To get the…

Q: How much is the free cash flow of a firm with revenues of $86 million, operating margin of 36.2%,…

A: Free cash flow in above question can be calculated by using this equation Free cash flow =Operating…

Q: a. For Year 6, what is the cash flow before taxes, CFBT? S b. For Year 6, what is the taxable…

A: Please note the following formula to determine: a. Cash flow before tax = Gross Income - Operating…

Q: Part 2 Required: Assume that Dodder operates in a country with a 40% tax rate and that accounting…

Q: What is the average rate of return for this investment? * Sample format: 11% The management of NUBD…

A: Rate of return: It implies to the rate at which the return is expected to be generated by the…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: The company's total value is measured with Enterprise value. This serves as a comprehensive measure…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: The total value of the firm can be found by adding all the discounted cash flows along with the…

Q: You are considering an investment in Fields and Struthers, Incorporated, and want to evaluate the…

A: According to the question given, we need to compute the NOPAT, operating cash flows, investment in…

Q: Amalgamated Industries has Sales of 3,500, COGS of 1,500, and EBIT of 600. If Depreciation is 400,…

A: Here, Sales is 3,500 COGS is 1,500 EBIT is 600 Depreciation is 400 Interest Expense is 200 Taxes is…

Q: a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your…

A: The weighted average cost of capital measures the typical cost a business pays to finance its…

Q: GREEN Recycling Com ness today. It recycles p inum, and glass. The ir ness is $510,000. The r e…

Q: your answers to two decimal places. Machine A Machine B is the better project and will increase the…

A: First, we need to determine the NPV of both the opportunities. To make the life of both the projects…

Q: annual cash flow from operations,

A: Annual revenue = Initial investment * Accounting rate of return Initial investment P160,000…

Q: Question 1 A company has two projects to choose from with the following annual after-tax cash flows:…

A: Payback period is that capital budgeting technique which shows the time period to recover our cash…

Q: The MoMi Corporation's cash flow from operations before interest and taxes was $4 million in the…

A: Value of equity is to be calculated by the multiplication of the outstanding shareholders with the…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: year 1Year 2Year 3Year 4Year 5EBITDA$78$98$113$118Depreciation$38$48$53$58Pretax…

Q: ompany's total value.

A: Weight of debt = 40%Weight of equity = 60%Cost of debt = 10%Cost of equity = 14%Tax rate = 30%Year…

Q: a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your…

A: The weighted average cost of capital measures the typical cost a business pays to finance its…

Q: Consider the following investment: capital cost is $250 million, all of which can be depreciated in…

A: Initial capital expenditure = $250 MWorking capital = $65 MTax rate = 30%Net revenues in first year…

Q: As a member of Apache Oil Corporation's financial staff, you must estimate the Year 1 cash flow for…

A: The operating cash flow can be calculated by adding up depreciation expense to income after tax.…

Q: Beyer Company is considering the purchase of an asset for $210,000. It is expected to produce the…

A: Payback period is the period within which the company recovers its investment amount in a project.

Q: 3. Assume a firm has earnings before depreciation and taxes of $500,000 and no depreciation. It is…

A: Earning before depreciation and taxes $500,000 Depreciation…

Q: machine costs $5,000 and depreciates at a rate of 25% the nominal interest rate is 10% and the…

A: It is given that the machine cost is $5000. Depreciation rate is 25%. Nominal interest rate is 10%…

Q: Shelton Tax Services is considering investing in new software for their corporate tax business. The…

A: A method for assessing whether to invest in a financial instrument is net present value. It is…

Q: what is the present value of all your profits over the next 5 years? SHOW A “ROUGH” CASH FLOW…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Nine Point Industries has $39,000,000 in equipment that has a 15 year class life. The equipment is 3…

A: Terminal cash flow is the net cash flow from the sale of equipment. Net cash flow from sale of…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: The company's total worth today is equivalent to the total of the cash flows along with the terminal…

Q: If the property before tax cashflow (PBTCF) in a given year is $125,000, total debt service is…

A: The Equity after tax cash flow of the investor is that income after deducting all expenses and tax.

Q: he payback period for the ata:

A: Payback period is the period within which the initial investment is recovered.

Q: How much is the free cash flow of a firm with revenues of $72 million, operating margin of 42.4%,…

A: FCFF is the total cash flows received by the firm from the net operating activities after adjustment…

Q: Given the future cash flows (from cost savings) of an equipment for the next three years, use a…

A: 1. Profitability Index - It is the ratio that measures the return on investment made in the years by…

Q: market value of $1.5 billion in equal amounts for a period of 15 years, and the corporate income tax…

A: The part of a person's or entity's income that is subject to taxation by the government is known as…

Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…

A: Here,Weight of Equity60%Weight of Debt40%Cost of Equity17%Cost of Debt8%Tax Rate30%After Tax Cost of…

Q: Nokela Industries purchases a $ 38.8 million cyclo-converter. The cyclo-converter will be…

A: Depreciation and its tax shield do not affecct the cash flows directly but it have an indirect…

Question

Problem 9-06
Assume Lasher's Kitchen has pretax earnings of $50,000 after depreciation expense of $10,000. If the firm's tax rate is 20 percent,
what is its cash flow from operations? Round your answer to the nearest dollar.
$

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Formula

VIEW

Step 2: calculation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Exercise 4 Complete the last four columns of the table below using an effective tax rate of 40% for an asset that has a first cost of 20,000 QAR and a 3-year recovery period with salvage value of 2,000 using straight line depreciation. All cash flows are in 1,000 units.
ASAP PLZ
pm.5
mni.4 The Cement Company has revenues of $100,000 in year 1 and it is expected to grow by 15% in year 2 and 25% in year 3. Operating expenses inclusive of depreciation are $75,000 in year 1 and are expected to increase by 10% per year, the depreciation is expected to be calculated on a straight-line method on a piece of equipment that costs $90,000, and the company marginal tax rate is 40 percent. In addition, the Cement Company expects that it will have to add about $8,000 per year to its net working capital in years 1 to 3. Calculate the company's Net (operating) cash flow for years 1, 2, and 3.
6. A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the present value of the tax cashflow at time 1, to the nearest £100? A £14,700 B £26,200 C £28,800 D £144,000
Part 1 of 2 Points: 0 of 2 Save Suppose a firm's tax rate is 25%. K a. What effect would a $9.13 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would a $11.35 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.27 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $9.13 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices that apply.) A. A $9.13 million operating expense would be immediately expensed, increasing operating expenses by $9.13 million. This would lead to a reduction in taxes of 25% x $9.13 million = $2.28 million. B. A $9.13 million operating expense would be immediately expensed, increasing operating expenses by $9.13 million. This would lead to an increase in taxes of 25% x $9.13 million = $2.28 million. C.…
ssignment i You are considering an investment in Fields and Struthers, Incorporated, and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $62 million, had a tax rate of 21 percent, and its depreciation expense was $5 million. Fields and Struthers's gross fixed assets increased by $32 million from last year to this year. The firm's current assets increased by $20 million and spontaneous current liabilities increased by $12 million. Calculate Fields and Struthers's NOPAT. Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.) NOPAT Operating cash flow 43.4 million Calculate Fields and Struthers's operating cash flow. Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.) Investment in operating capital Saved million Calculate Fields and Struthers's investment in operating capital. Note: Enter your answer in…
question 7 You have forecast pro forma earnings of $1,174,000.This includes the effect of $154,000 in depreciation. You also forecast a decrease in working capital of $109,000 that year. What is your forecast of free cash flows for that year? The free cash flows from earnings will be $________.(Round to the nearest dollar.)
Apo Don't upload any image please
Question 2 Consider a 100,000 sqf office building with the following cash flows: The gross rent in year 1 is $30/sqf/year and the rents are expected to grow at 2% per year. The operating expenses in the first year are $5/sqf/year and are expected to increase at 3% per year. There are no capital expenditures. All cash flows are in arrears. The discount rate for the property is 9%. a. What is the value of the building if the building will be held and rented indefinitely? What is the cap rate at time 0? b. What is the value of the building if the building is sold at the end of 10 years at a 8% cap rate? What is the cap rate at time 0?
Mansukh
Nikul

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS