The Yellow Corp has $750,000 of debt outstanding, and it pays an interest rate of 8% annually. Its annual sales are $2.25million, its average tax rate is 25%, and its net profit margin on sales is 12%. The company has depreciation expense of $27,000with no amortization. What is the EBITDA coverage for Yellow Corp?O 7.38x0742O 745x07.34x

ParticularsValuesOutstanding Debt$750,000Annual interest rate8%Annual sales$2,250,000Average tax…

Answered: The Yellow Corp has $750,000 of debt…

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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Morrow Corp. has an EBIT of $875,000 per year that is expected to continue in perpetuity. The unlevered cost of equity for the company is 14 percent and the corporate tax rate is 25 percent. The company also has a perpetual bond issue outstanding with a market value of $2.3 million. What is the value of the company? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)
Brown Office Supplies recently reported $4422 in Net Income. It had $9,000 of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. How much was EBIT?. O $8,918 O $5,49 O $8,033 O $8000 O $7,223
The Morrit Corporation has $1,080,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 3 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
The H.R. Pickett Corp. has $500,000 of debt outstanding, and it pays an annual interest rate of 10%. Its annual sales are $2 million, its average tax rate is 30%, and its net profit margin is 5%. What is its TIE ratio?
he Morrit Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit’s annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit’s TIE ratio?
The Morrit Corporation has $960,000 of debt outstanding, and it pays an interest rate of 9% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 4%. If the company does not maintain a TIE ratio of at least 3 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
K Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.9 million, and pays corporate income tax at rate 25%. Its cost of equity is 11% and its cost of debt is 5%. a. What is Rogot's pretax WACC? b. What is Rogot's (effective after-tax) WACC? a. What is Rogot's pretax WACC? Rogot's pretax WACC is%. (Round to two decimal places.)
Alpha Resources has sales revenue of $800,000, operating costs of $400,000, and depreciation expense of $20,000. The company has $300,000 of outstanding bonds that pay 5% interest and it faces an average state-plus-federal tax rate of 40%. What is its net income?
The Morrit Corporation has $540,000 of debt outstanding, and it pays an interest rate of 11% annually. Morrit's annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 6 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
Once Bitten Corp. uses no debt. The weighted average cost of capital is 9 percent. If the company's EBIT is $1,980,000 in perpetuity and there are no taxes, what is the company worth? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) Note: For simplicity, in this chapter we typically assume that net capital spending equals depreciation, and net working capital remains constant. This means that EBIT (net of any taxes) will equal CFFA. Company's Value %24
Edwards Construction currently has debt outstanding with a market value of $155,000 and a cost of 10 percent. The company has EBIT of $15,500 that is expected to continue in perpetuity. Assume there are no taxes. a-1. What is the value of the company's equity? (Do not round intermediate calculations. Leave no cell blank - be certain to enter "0" wherever required.) a- What is the debt-to-value ratio? (Do not round intermediate calculations and round 2. your answer to the nearest whole number, e.g., 32.) b. What are the equity value and debt-to-value ratio if the company's growth rate is 5 percent? (Do not round intermediate calculations and round your "Debt-to- value" answer to 3 decimal places, e.g., 32.161.) c. What are the equity value and debt-to-value ratio if the company's growth rate is 7 percent? (Do not round intermediate calculations and round your "Debt-to- value" answer to 3 decimal places, e.g., 32.161.)
Yo

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