Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 13, Problem 13.5WUE
Cobalt Industries had sales of 150,000 units at a price of $10 per unit. It faced fixed operating costs of $250,000 and variable operating costs of $5 per unit. The company is subject to a tax rate of 38% and has a weighted average cost of capital of 8.5%. Calculate Cobalt’s
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Cobalt Industries had sales of 148,100 units at a price of $9.08 per unit. It faced fixed operating costs of $240,000 and variable operating costs of $4.56 per unit. The
company is subject to a tax rate of 38% and has a weighted average cost of capital of 8.7%. Calculate Cobalt's net operating profits after taxes (NOPAT), and use it to
estimate the value of the firm. (Assume the firm's earnings are not growing.)
Cobalt's NOPAT is $
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Local Co. has sales of $10.3 million and cost of sales of $6.1 million. Its selling, general and administrative expenses are $460000 and its research and development is $1.1 million. It has annual depreciation charges of $1.1 million and a tax rate of 25% .
a. What is Local's gross margin?
b. What is Local's operating margin?
c. What is Local's net profit margin?
d. If Local Co. had an increase in selling expenses of $270000, how would that affect each of its margins?
Local Co. has sales of $10.5 million and cost of sales of $5.5 million. Its selling, general and administrative expenses are $480,000 and its research and development
is $1.4 million. It has annual depreciation charges of $1.2 million and a tax rate of 25%.
a. What is Local's gross margin?
b. What is Local's operating margin?
c. What is Local's net profit margin?
a. What is Local's gross margin?
Local's gross margin is 47.62 %. (Round to two decimal places.)
b. What is Local's operating margin?
Local's operating margin is 27.71%. (Round to two decimal places.)
Chapter 13 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 13.1 - What does the term leverage mean? How are...Ch. 13.1 - Prob. 13.2RQCh. 13.1 - What is operating leverage? What causes it? How do...Ch. 13.1 - What is financial leverage? What causes it? How do...Ch. 13.1 - What is the general relationship among operating...Ch. 13.2 - What is a firms capital structure? What ratios...Ch. 13.2 - In what ways are the capital structures of U.S....Ch. 13.2 - What is the major benefit of debt financing? How...Ch. 13.2 - Prob. 13.9RQCh. 13.2 - Prob. 13.10RQ
Ch. 13.2 - Prob. 13.11RQCh. 13.2 - How do the cost of debt, the cost of equity, and...Ch. 13.3 - Explain the EBIT -EPS approach to capital...Ch. 13.4 - Why do maximizing EPS and maximizing value not...Ch. 13.4 - Prob. 13.15RQCh. 13 - Canvas Reproductions has fixed operating costs of...Ch. 13 - Prob. 13.2WUECh. 13 - Prob. 13.3WUECh. 13 - Parker Investments has EBIT of 20,000, interest...Ch. 13 - Cobalt Industries had sales of 150,000 units at a...
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