BUS 225 DAYONE LL
17th Edition
ISBN: 9781264116430
Author: BLOCK
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 12, Problem 1P
Assume a corporation has earnings before
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Assume a corporation has earnings before depreciation and taxes of $82,000, depreciation of $45,000, and that it has a 25% combined tax bracket. What are the after-tax cash flows for the company?
Detailed stepwise
A firm's operating cash flow (OCF) is defined as ________.
a.
EBIT plus depreciation
b.
gross profit minus operating expenses
c.
gross profit minus depreciation
d.
EBIT times one minus the tax rate plus depreciation
Chapter 12 Solutions
BUS 225 DAYONE LL
Ch. 12 - Prob. 1DQCh. 12 - Why does capital budgeting rely on analysis of...Ch. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - What does the term mutually exclusive investments...Ch. 12 - Prob. 6DQCh. 12 - If a corporation has projects that will earn more...Ch. 12 - What is the net present value profile? What three...Ch. 12 - How does an asset’s ADR (asset depreciation...Ch. 12 - Assume a corporation has earnings before...
Ch. 12 - Assume a corporation has earnings before...Ch. 12 - Assume a firm has earnings before depreciation and...Ch. 12 - Assume a firm has earnings before depreciation and...Ch. 12 - Al Quick, the president of a New York Stock...Ch. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Assume a 90,000 investment and the following cash...Ch. 12 - Prob. 9PCh. 12 - X-treme Vitamin Company is considering two...Ch. 12 - You buy a new piece of equipment for 16,230, and...Ch. 12 - Prob. 12PCh. 12 - Home Security Systems is analyzing the purchase of...Ch. 12 - Aerospace Dynamics will invest 110,000 in a...Ch. 12 - The Horizon Company will invest 60,000 in a...Ch. 12 - Skyline Corp. will invest 130,000 in a project...Ch. 12 - The Hudson Corporation makes an investment of ...Ch. 12 - The Pan American Bottling Co. is considering the...Ch. 12 - You are asked to evaluate the following two...Ch. 12 - Turner Video will invest 76,344 in a project. The...Ch. 12 - The Suboptimal Glass Company uses a process of...Ch. 12 - Keller Construction is considering two new...Ch. 12 - Davis Chili Company is considering an investment...Ch. 12 - Telstar Communications is going to purchase an...Ch. 12 - Assume 65,000 is going to be invested in each of...Ch. 12 - The Summit Petroleum Corporation will purchase an...Ch. 12 - Oregon Forest Products will acquire new equipment...Ch. 12 - Universal Electronics is considering the purchase...Ch. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Hercules Exercise Equipment Co. purchased a...Ch. 12 - Prob. 2WECh. 12 - Returning to TXN’s summary page, record the...
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- Assume a corporation has earnings before depreciation and taxes of $126,000, depreciation of $42,000 and that it is in a 35 percent tax bracket. Compute its cash flow using the following format. (Input all answers as positive values.) C 500 Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow $ $ 0 0 0 Prev 1 of 9 *** MacBook Air Next >arrow_forwardYour firm has the following income statement items: sales of $52,000,000; income tax of $1,880,000; operating expenses of $9,000,000; cost of goods sold of $36,000,000; depreciation and amortization of $1,500,000; and interest expense of $800,000. For purposes of determining free cash flow, what is the amount of the firm's after-tax cash flow from operations? O $750,000 O $3,600,000 O $1,008,000 O $5,120,00Oarrow_forward4. Assume a firm has earnings before depreciation and taxes of $400,000 and depreciation of $100,000. If the firm is in a 35 percent tax bracket, compute its cash flow. b. If it is in a 20 percent tax bracket, compute its cash flow. a.arrow_forward
- Using the financial statements mentioned above estimate the annual rate of interest paid by the corporation (cost of debt). Also, find the tax rate and capitalization ratio (proportions among equity and debt). Using these values that you have found estimate the annual weighted cost of capital (WACC) of the corporation. Income statement PERIOD ENDING: 12/31/2019 Total Revenue $20,972,000 Cost of Revenue $17,755,000 Gross Profit $3,217,000 OPERATING EXPENSES Research and Development $0 Sales, General and Admin. $938,000 Non-Recurring Items $138,000 Other Operating Items $341,000 Operating Income $1,800,000 Add'l income/expense items $180,000 Earnings Before Interest and Tax $1,993,000 Interest Expense $394,000 Earnings Before Tax $1,599,000 Income Tax $326,000 Minority Interest $13,000 Equity Earnings/Loss Unconsolidated Subsidiary $0 Net Income-Cont. Operations $1,286,000 Net Income $1,273,000 Net Income Applicable to Common Shareholders…arrow_forward.....is the after tax cash flow generated by a business minus the cost of the capital it has deployed to generate that cash flow a. Net Present Value (NPV) a. Ob Economic value added (EVA) Oc. Internal Rate of Return (IRR) d. Discounted Cash Flowarrow_forwardconsider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries ( we usually call this SG&A for selling, general and administrative) of 1750.0million, depreciation of 2250.0 million, and interest expense of 2300 million. tax rate =21%. a. generate an income statement and show net income b. what is the company's operating cash flow? c. if there are 775.2 million shares outstanding, what is the EPS? d. if the company has a payout ratio of 20%, what is the dividends per share?arrow_forward
- A firm has recorded EBIT at $1,800, depreciation at $600, EBT at $1,700 and a tax rate of 40%. Find the operating cash flows for this firm. Hin #1t: Operating CF = EBIT + depreciation - tax. Hint #2: Tax = EBT * tax rate.arrow_forwardNeed answer of this questionarrow_forwardAn analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indication? B . Th is ratio is an eff ective tax ratio, measuring the amount of a company’s operating cash fl ow used for taxes and indicating a company’s effi ciency in tax management.arrow_forward
- Consider a company with earnings before interest and taxes (EBIT) of $450,000, tax rate of 16%, depreciation and amortization expenses of $60,000, capital expenditures of $80,000, acquisition expenses of $30,000 and change in working capital of $40,000. How much is its free cash flow during that period? Round to the nearest cent.arrow_forwardCalculate a firm's free cash flow if it has net operating profit after taxes of $60,000, depreciation expense of $10,000, net fixed asset investment requirement of $40,000, a net current asset requirement of $30,000 and a tax rate of 30%arrow_forwardYou are evaluating the balance sheet for Goodman Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $360,000, accounts receivable = $2,200,000, inventory = $1,900,000, accrued wages and taxes $690,000, accounts payable $990,000, and notes payable $790,000. Calculate Goodman Bees' net working capital. Note: Enter your answer in dollars not in millions. Net working capitalarrow_forward
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