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

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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.)
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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?
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Chapter 12 problem: Use the following information to determine cash flows for Company ABC. After you find the cash flows, also calculate NPV, IRR, and payback period: Equipment Cost Equipment purchase price: $250,000 Changes in net operating working capital Inventories will rise by $25,000 Accounts payable will rise by $5,000 Effect on operations New sales: 100,000 units/year @ $2/unit Variable cost: 75% of sales Life of the project Economic life: 4 years Salvage value: $30,000 WACC: 15% Tax Rate: 25%

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