Your company received a $9 million order on the last day of the year. You filled the order with $3 million worth of inventory. The customer picks up the order the same day and pays $3 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $6 million within 40 days. Suppose your firm’s tax rate is 0% (ignore taxes). Based on the above information; a.No option is correct b.Your earnings went up by $9 million c.Your earnings did not change d.Your earnings went up by $6 million
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Your company received a $9 million order on the last day of the year. You filled the order with $3 million worth of inventory. The customer picks up the order the same day and pays $3 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $6 million within 40 days. Suppose your firm’s tax rate is 0% (ignore taxes).
Based on the above information;
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- Suppose your firm receives a $4.06 million order on the last day of the year. You fill the order with $2.07 million worth of inventory. The customer picks up the entire order the same day and pays $1.24 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $2.82 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: d. Inventory e. Cash a. Revenues b. Earnings c. Receivables a. Revenues Revenues will increase by $ million. (Select from the drop-down menu and round to two decimal places.) b. Earnings Earnings will increase by $ million. (Select from the drop-down menu and round to two decimal places.) c. Receivables Receivables will increase by $ million. (Select from the drop-down menu and round to two decimal places.) d. Inventory Inventory will decrease by $ million. (Select from the drop-down menu and round to two decimal places.) e. Cash…Suppose your firm receives a $4.93 million order on the last day of the year. You fill the order with $1.89 million worth of inventory. The customer picks up the entire order the same day and pays $1.23 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $3.70 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues b. Earnings c. Receivables d. inventory e. cashSuppose your firm receives a $5.82 million order on the last day of the year. You fill the order with $1.97 million worth of inventory. The customer picks up the entire order the same day and pays $1.09 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $4.73 million within 40 days. Suppose your firm's tax rate is 0% (i.e., ignore taxes). Determine the consequences of this transaction for each of the following: a. Revenues b. Earnings c. Receivables d. Inventory e. Cash a. Revenues Revenues will ▼ increase or decrease by $___ million. (Select from the drop-down menu and round to two decimal places.)
- Your company received a $9 million order on the last day of the year. You filled the order with $3 million worth of inventory. The customer picks up the order the same day and pays $3 million up front in cash; you also issue a bill for the customer to pay the remaining balance of $6 million within 40 days. Suppose your firm’s tax rate is 0% (ignore taxes). Based on the above information; a.Your earnings went up by $9 million b.No option is correct c. Your earnings did not change d.Your earnings went up by $6 millionThe Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B $42,500 10,500 10,500 10,500 + replace $52,500 9,000 9,000 9,000 9,000 + replace 4 These costs are expressed in real terms. Suppose that technological change is expected to reduce costs by 10% per year. There will be new machines in year 1 that cost 10% less to buy and operate than A and B. In year 2, there will be a second crop of new machines incorporating a further 10% reduction, and so on. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge at the end of the first year and how would this alter in subsequent years given the expected technological changes? Assume a 9% real discount rate and ignore E taxes. (Do not round intermediate calculations. Enter your…An insurance company specializes in selling warranties for consumer electronics products. For selling these warranties they receive cash up front, but later they must pay out cash for policyholders who file claims. Suppose a particular product they sell brings in $1 million in cash right away but requires them to pay $1.2 million in claims a year later. The firm's cost of capital is 10%. Calculate the IRR that the firm earns on the product and comment on whether it is a good investment.
- Ice Cream Sandwich Co. expects EBIT of $100,000 every year forever. Ice Cream Sandwich Co. currently has no debt and its cost of equity is 12%. The firm can borrow at 3%. The corporate tax rate is 31%. What is the value of the firm? Enter your answer rounded to two decimal places. Correct response: 575,000±0.01 575000 Click "Verify" to proceed to the next part of the question. This question has 4 parts, so you will be clicking verify 4 times. Given that the firm has a value of $575,000 when it is all equity, what will be the value of the firm if Ice Cream Sandwich Co. borrows $230,000 of permanent 790478.78 debt and uses the proceeds to buy back stock? Enter your answer rounded to two decimal places. Correct response: 646,300±0.01 Click "Verify" to proceed to the next part of the question. ✪ Given that the firm has a value of $575,000 when it is all equity, how can Ice Cream Sandwich Co. maximize the value of the firm? What will be the maximum value if there are no costs to financial…Suppose a firm’s tax rate is 25%. 1. What effect would a $9.26 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices thatapply.) A. A $9.26 million operating expense would be immediately expensed, increasing operating expenses by $9.26 million. This would lead to a reduction in taxes of 25%×$9.26 million=$2.32 million. B. A $9.26 million operating expense would be immediately expensed, increasing operating expenses by $9.26 million. This would lead to an increase in taxes of 25%×$9.26 million =$2.32 million. C. Earnings would decline by $9.26 million−$2.32 million=$6.94 million. The same effect would be seen on next year's earnings. D. Earnings would decline by $9.26 million−$2.32 million=$6.94 million. There would be no effect on next year's earnings. 2. What effect would a $11.75 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.35 million…Jamboo Corporation is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $230009 if credit is extended. Of the new accounts receivable generated, 10 percent will prove to be uncollectible. Additional collection costs will be 5 percent of sales, and production and selling costs will be 75 percent of sales. The firm needs to pay 1,500 tax on additional sales. Compute Net income after tax. ANSWER FORMAT: 1234.56 Answer:
- Calvert Corporation expects an EBIT of $25,100 every year forever. The company currently has no debt, and its cost of equity is 15.2 percent. The company can borrow at 10 percent and the corporate tax rate is 24 percent. a. What is the current value of the company? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)b-1. What will the value of the firm be if the company takes on debt equal to 60 percent of its unlevered value? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)b-2. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)c-1. What will the value of the firm be if the company takes on debt equal to 60 percent of its levered value? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g.,…Suppose a firm's tax rate is 25%. 1. What effect would a $10.92 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. $10.92 million operating expense would be immediately expensed, increasing operating expenses by $10.92 million. This would lead to a reduction in taxes of 25%×$10.92 million=$2.73 million. B. A $10.92 million operating expense would be immediately expensed, increasing operating expenses by $10.92 million. This would lead to an increase in taxes of 25%×$10.92 million=$2.73 million C. Earnings would decline by $10.92 million−$2.73 million=$8.19 million. There would be no effect on next year's earnings. D. Earnings would decline by $10.92 million−$2.73 million=$8.19 million. The same effect would be seen on next year's earnings 2. What effect would a $10.25 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.05…Calvert Corporation expects an EBIT of $25,500 every year forever. The company currently has no debt, and its cost of equity is 15.4 percent. The company can borrow at 10.2 percent and the corporate tax rate is 21 percent. a. What is the current value of the company? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-1. What will the value of the firm be if the company takes on debt equal to 50 percent of its unlevered value? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c-1. What will the value of the firm be if the company takes on debt equal to 50 percent of its levered value? (Do not round intermediate calculations and round your answers to 2 decimal places,…