The most recent financial statements for Crosby, Incorporated, appear below. Interestexpense will remain constant, the tax rate and the dividend payout rate also will remainconstant. Costs, other expenses, current assets, fixed assets, and accounts payableincrease spontaneously with sales. Assume the firm is operating at full capacity and thedebt-equity ratio is held constant.SalesCostsOther expensesEarnings before interest and taxesInterest expenseTaxable incomeTaxes (21%)Net incomeCROSBY, INCORPORATED2021 Income StatementDividendsAddition to retained earnings→ Show Transcribed TextCurrent assetsCashAccounts receivableInventoryTotalTotal assetsFixed assetsNet plant and equipmentAssets$ 27,47556,265$ 20,94031,97071,320$ 124,230CROSBY, INCORPORATEDBalance Sheet as of December 31, 2021$ 341,980$ 686,530554,42014,020$ 466,210$ 118,09012,090$ 106,00022,260$ 83,740Liabilities and Owners' EquityCurrent liabilitiesAccounts payableNotes payableTotalLong-term debtOwners' equityCommon stock and paid-in surplus $ 105,000Retained earnings166,705Total$ 271,705$ 466,210Total liabilities and owners' equity$ 53,79013,215$ 67,005$ 127,500 Complete the pro forma income statements below. (Do not round intermediatecalculations and round your answers to the nearest whole number, e.g., 32.)SalesCostsOther expensesEBITInterest expenseTaxable incomeTaxes (21%)Net incomeDividendsAdd to REPro Forma Income Statement20% Sales Growth 30% Sales Growth 35% Sales GrowthCalculate the EFN for 20, 30, and 35 percent growth rates. (A negative answer shouldbe indicated by a minus sign. Do not round intermediate calculations and round youranswers to the nearest whole number, e.g., 32.)EFN20%30%35%

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Description: The most recent financial statements for Crosby, Incorporated, appear below. Interestexpense will remain constant, the tax rate and the dividend payout rate also will remainconstant. Costs, other expenses, current assets, fixed assets, and accounts

Interest expense, tax rate and the dividend payout rate will also remain constant.Costs and other…

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The most recent financial statements for Crosby, Incorporated, appear below. Interest expense will remain constant, the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant. Sales Costs Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes (21%) Net income CROSBY, INCORPORATED 2021 Income Statement Dividends Addition to retained earnings → Show Transcribed Text Current assets Cash Accounts receivable Inventory Total Total assets Fixed assets Net plant and equipment Assets $ 27,475 56,265 $ 20,940 31,970 71,320 $124,230 $ 686,530 554,420 14,020 $ 118,090 12,090 CROSBY, INCORPORATED Balance Sheet as of December 31, 2021 $ 341,980 $ 106,000 22,260 $ 83,740 C Liabilities and Owners' Equity Accounts payable Notes payable Total Long-term debt Owners' equity Common stock and paid-in surplus $ 105,000 Retained earnings 166,705 Total $271,705 $ 466,210 Total liabilities and owners' equity $ 466,210 Current liabilities $ 53,790 13,215 $ 67,005 $ 127,500

The most recent financial statements for Crosby, Incorporated, appear below. Interest expense will remain constant, the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant. Sales Costs Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes (21%) Net income CROSBY, INCORPORATED 2021 Income Statement Dividends Addition to retained earnings → Show Transcribed Text Current assets Cash Accounts receivable Inventory Total Total assets Fixed assets Net plant and equipment Assets $ 27,475 56,265 $ 20,940 31,970 71,320 $124,230 $ 686,530 554,420 14,020 $ 118,090 12,090 CROSBY, INCORPORATED Balance Sheet as of December 31, 2021 $ 341,980 $ 106,000 22,260 $ 83,740 C Liabilities and Owners' Equity Accounts payable Notes payable Total Long-term debt Owners' equity Common stock and paid-in surplus $ 105,000 Retained earnings 166,705 Total $271,705 $ 466,210 Total liabilities and owners' equity $ 466,210 Current liabilities $ 53,790 13,215 $ 67,005 $ 127,500

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

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Given the most recent financial statements for FY2023. Sales for FY2024 are expected to grow by 10 percent. The following assumption must be held in the pro forma financial statements. The tax rate (percentage), the interest expense ($ amount), and the dividend payout ratio (percentage) will remain constant. COGS, SGA, Depreciation, all current asset accounts, Net PPE, intangibles, other assets, and accounts payable increase spontaneously with sales. Calculate the internal growth rate if the firm operates at full capacity and no new debt or equity is issued. (Enter percentages as decimals and round to 4 decimals) MSFT ($ in millions, shares in millions) Income Statement Sales COGS Gross Profit Research and Dev. SGA FY2023 211,915 65,863 146,052 27,195 16653 Depreciation 13681 Operating Income, EBIT 88,523 Interest Expense 1968 Pretax income, EBT 86,555 Taxes 16950 Net income 69,605 32,902 36,703 Retained Earnings Dividends Price per share Shares outstanding 330.24 7,430 Balance Sheet…
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The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital of the rate at which the company pays taxes. The firm wishes to maintain a capital structure of 25% debt, 15% preferred stock, and 60% common stock. The cost of financing with retained earnings is 16%, the cost of preferred stock financing is 9%, and the before-tax cost of debt financing is 7%. Calculate the weighted average cost of capital (WACC) given a tax rate of 35%. ons The firm's WACC is %. (Round to two decimal places.) Enter your answer in the answer box. pe here to search inse
Problem 1 (Pro Forma Statements) Consider the following simplified financial statements for the Phillips Corporation assuming no income taxes. Statement of Financial Position Income Statement Sales Debt Equity Total P 5,200 10.600 PI5,800 Assets PI5,800 Costs Net income P23,000 16.700 P 6.300 Total P15.800 Phillips has predicted a sales increase of 15 percent. It has predicted that every item on the statement of financial position will increase by 15 percent as well. Create the pro forma statements and reconcile them. What is the additional financing needed here.
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A1 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 A B V 1 X Sales Costs Net income ✓ C Income statement $ Sales increase Payout rate fx $ Dividends Add. To RE D 36,000 29,800 6,200 15% 50% Pro forma income statement Sales Costs Net income E F G Assets $ Total $ Assets H Total I Balance sheet 26,400 Debt Equity 26,400 Total Complete the following analysis. Do not hard code values in your calculations. Pro forma balance sheet Debt Equity Total $ External financing needed $ J 6,300 20,100 26,400 K
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You are given the following table showing the end of year net debt for a target firm. The cost of net debt is 8.2 percent, and the corporate tax rate is 21 percent. Calculate the present value of the tax shield generated in the four- year period. Year End of Year Net Debt O $81,347 O $26,898 O $21,624 O $102,970 0 $192,500 1 2 7 3 4 $207,000 $390,000 $455,000 $510,000
The most recent financial statements for Crosby, Incorporated, follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt- equity ratio is held constant. CROSBY, INCORPORATED 2020 Income Statement Sales Costs Other expenses Earnings before interest and taxes Interest paid Taxable income Taxes (23%) Net Income Dividends $ 38,340 Addition to retained earnings 40,816 Current assets Cash Accounts receivable Inventory Total Total assets $ 25,040 34,440 71,240 $ 130,720 Fixed assets Net plant and equipment $ 218,000 $ 761,000 617,000 28,000 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets $ 116,000 13,200 $ 102,800 23,644 $ 79,156 Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable Total Long-term debt Owners' equity Common…
You have the following information about two firms, Debt Free, Incorporated and Debt Spree, Incorporated. Both firms have the same prospects for sales and EBIT, and both have the same level of assets, tax rate and borrowing rate. They differ in their use of debt financing. Scenario Sales EBIT Bad year $ 200 $ 12 Normal year $ 275 $ 38 Good year $ 380 $ 46 Debt Free Debt Spree Total assets $ 250 $ 250 Tax rate 21% 21% Debt $ 0 $ 150 Equity $ 250 $ 100 Borrowing rate 16% 16% Required: a. Calculate the interest expense for each firm: Interest expense for Debt Free = $ Interest expense for Debt Spree = $ b. Calculate the following items for each firm for each scenario (bad year, normal year, good year): return on assets (ROA), net profit, and return on equity (ROE). (Use a minus sign to indicate negative answers. Round your answers to 2 decimal places.) Debt Free Debt Spree Scenario ROA Net Profit ROE ROA Net Profit ROE Bad…
Here is Icknield’s market-value balance sheet (figures in $ millions): Net working capital $550 Debt $800 long term assets $2,150 Equity $1,900 value of firm $2,700 $2,700 The debt is yielding 7%, and the cost of equity is 14%. The tax rate is 21%. Investors expect this level of debt to be permanent. a. What is Icknield’s WACC? b. How would the market-value balance sheet change if Icknield retired all its debt?

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