Total assets of Pelican Paper and Timberland Forest are $200 million and $120 million, EBIT is $85 million for both forms. The interest expenses are 52 million for Pelican and no interest expensesfor Timberland Forest. The tax rate is 30%. Based on BOA which firm is better?For the tocibar, press ALT+F10 (PC) or ALT-IN-10 (MacBIVSParagraphArial-= Jo MD10pt#00***FCF M

Return on Asset (ROA) = Net Income / Total AssetsNet Income = Earnings After TaxTotal Assets =…

Answered: Total assets of Pelican Paper and…

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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Pretax accounting income is $206,000. Depreciation for tax is $111,000; depreciation for accounting is $29,000. Bad debt expense for tax is $12,000; bad debt expense for accounting is $9000. A fine for pollution of a river was imposed by the state of Kentucky for $7000. The tax rate is 20%. Which of the following is true? Income tax expense is 206,000 x .2 The current portion is 206,000 x .20 Income tax expense is less than the current portion. Income tax expense is more than the current portion.
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Mao Construction recently reported $20.50 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. What was Mao's operating income, or EBIT, in millions? * $4.90 $3.97 $3.57 $4.41 O $3.21

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Total assets of Pelican Paper and Timberland Forest are $200 million and $120 million BT 585 million for both forms. The interest expenses are $1 million for Pelican and no interest expenses for Timberland Forest. The tax rate is 30%. Based on BOA which firm