Rao Construction recently reported $20.00 million of sales, $12 million of operating costs other than depreciation, and $3.00 millon of depreciation. It had $10 million of bonds outstanding that carry a 10% interest rate, and its federal-plus-state income tax rate was 40%. What was Rao's operating income, or EBIT. In millions? Select one: O a. 8 millions O b. 3 millions O c. 4 millons Od. 5 millions

Rao Construction recently reported $20.00 million of sales, $12 million of operating costs other than depreciation, and $3.00 millon of depreciation. It had $10 million of bonds outstanding that carry a 10% interest rate, and its federal-plus-state income tax rate was 40%. What was Rao's operating income, or EBIT. In millions? Select one: O a. 8 millions O b. 3 millions O c. 4 millons Od. 5 millions

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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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Q17. (all figures in $m) PECo just bought out TargetCo for an enterprise value of $200. The transaction is financed with $115 debt. The cost of debt is 5% and the TargetCo's tax rate is 20%. The project FCF's for the next 3 years are as shown below. Year Target FCF (Sm) O A $60.77 OB. $62.43 O C. $64.79 1 21 D. $66.39 2 Assume all of TargetCo's free cash flows will be applied towards debt paydown (after paying interest expenses) and debt paydown happens at the end of the year. What should be the ending debt balance in year 3? 22 3 23
10. Intellus has long-term debt of $5 million, owners' equity of $7.75 million, current assets of $1 million, gross fixed assets of $20 million, and accumulated depreciation of $7 million. What is the firm's net working capital?
Consider a company that has issued $8 million in debt, pays a 6% interest rate on this debt and pays a 30% tax rate. The dollar amount of interest paid on the debt is Select one: $480,000 $2,400,000 $8,000,000 $144,000
Calculating OCF (LO3) Fergus Inc. has sales of $39,500, costs of $18,400, depreciation expense of $1,900, and interest expense of $1,400. If the tax rate is 35%, what is the operating cash flow, or OCF?
ABC Corp is a manufacturing company with the following information: 1, Financial Statements: Net Income: $10 million Depreciation: 55 million Capital Expenditures (CapEx): $8 million Changes in Working Capital. $2 million (increase) 2. Balance Sheet Total Debt: $40 million (long-term debt) Total Equity: $60 million Total Assets $100 million 3. Market information: Risk Free Rate: 3% Market Risk Premium: 5% Comparable Companies Unlevered Beta 1.0 (overage of industry peers) Tax Rate: 30% Current Stock Price: $25 per share Number of Shares Oustanding 4 million 4. Assumptions: Terminal Growth Rate: 5% Long-term WACC: 0.25% less than the Initial WACC Questions: a. Calculate the Free Cash Flow to the Firm (FCFF) for ABC Corp for the next five years. b. Determine the Cost of Equily using the Capital Asset Pricing Model (CAPM) with unleverted bela. c. Cakulate the Levered Beta for ABC Corp by using the industry average unlovered beta and the company's capital structure d. Calculate the Cost of…
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Sub : FinancePls answer very fast.I ll upvote. Thank You Smashed Pumpkins Company paid $136 in dividends and $568 in interest over the past year. The company increased retained earnings by $474 and had accounts payable of $594. Sales for the year were $16,265 and depreciation was $720. The tax rate was 21 percent. What was the company's EBIT? Options: $984 $1,333 $1,340 $6,181 $1,823
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".
Davidson Corp. generated $25,000 in EBIT, $9,000 in depreciation, and spent $12,000 on capital expenditures and another $6,000 on net operating working capital. Davidson’s tax rate is 40% and its stock price is $35 per share. Free cash flow for Davidson is closest to: Question 40 options: $6,000 $22,000 $13,000 ($2,000)

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