The Bakery Inc. expects sales of $750,000 next year at a 5% pretax profit margin and an average tax rate of 30%. If it chooses to pay out 25% of its earnings as dividends, what is the projected increase in retained earnings?
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- What is the projected increase in retained earnings ??What is the projected increase in retained earnings ?? General accountingSuppose a firm's tax rate is 25%. a. What effect would a $9.05 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would a $10.2 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.04 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $9.05 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 $9.05 million operating expense would be immediately expensed, increasing operating expenses by $9.05 million. This would lead to a reduction in taxes of 25% x $9.05 million = $2.26 million. B. A $9.05 million operating expense would be immediately expensed, increasing operating expenses by $9.05 million. This would lead to an increase in taxes of 25% × $9.05 million = $2.26 million. C. Earnings would decline by $9.05…
- Suppose a firm's tax rate is 25%. a. What effect would a$9.85 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would an $8.95million capital expense have on this year's earnings if the capital is depreciated at a rate of $1.79 million per year for five years? What effect would it have on next year's earnings?Suppose a firm's tax rate is 25 %. What effect would a $ 11.4 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $ 2.28 million per year for five years? What effect would it have on next year's earnings?Grommit Engineering expects to have net income next year of $24.36 million and free cash flow of $22.17 million. Grommit's marginal corporate tax rate is 35%. a. If Grommit increases leverage so that its interest expense rises by $6.7 million, how will net income change? b. For the same increase in interest expense, how will free cash flow change? a. If Grommit increases leverage so that its interest expense rises by $6.7 million, how will net income change? Net income will fall to $ 4.36 million. (Round to two decimal places.) b. For the same increase in interest expense, how will free cash flow change? (Select the best choice below.) A. Free cash flow increases by the amount of the interest expense. B. Free cash flow decreases by the amount of the interest expense. C. Free cash flow is not affected by interest expense. D. None of the above.
- Tobin Supplies Company expects sales next year to be $490,000. Inventory and accounts receivable will increase $75,000 to accommodate this sales level. The company has a steady profit margin of 20 percent with a 50 percent dividend payout. How much external financing will Tobin Supplies Company have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%?a. What are the projected sales in Years 1 and 2?b. What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? c. What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2?d. What is the projected FCF for Year 2?Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $286,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 35%. If its WACC is 10% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value? The company's enterprise value is $ (Round to the nearest dollar.)
- A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant annual rate of 5 percent. If the firm’s opportunity cost of funds is 8 percent, determine the value of the firm: a. The instant before it pays out current profits as dividends: b. The instant after it pays out current profits as dividends.What are its after tax earnings? AccountingSuppose a firm's tax rate is 35%. a. What effect would a $9.64 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would an $8.70 million capital expense have on this year's earnings if the capital is depreciated at a rate of $1.74 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $9.64 million operating expense have on this year's earnings? Earnings would increase (decline) by $ ☐ million. (Round to two decimal places, and use a negative number for a decline.) What effect would it have on next year's earnings? (Select the best choice below.) A. There would be no effect on next year's earnings. B. Next year's earnings will be affected by a decline of $3.37 million. C. Next year's earnings will be affected by an increase of $3.37 million. D. Next year's earnings will be affected by the same amount. b. What effect would an $8.70 million capital expense have on…
