EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 2.A, Problem 8P
a)
Summary Introduction
To determine: The post-tax net income obtainable to common shareholders.
b)
Summary Introduction
To determine: The post-tax net income available to common shareholders.
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Last year ABC Corp had $10 million in operating income (EBIT). Its depreciation expense was $4 million, its interest expense was $3 million, and its corporate tax rate was 37.6%. At year-end, it had $22 million in current assets, $3 million in accounts payable, $1 million in accurals, $2 million in notes payable, and $15 million in net plant and equipment. Rattner had no other current liabilities. Assume that Rattner’s only noncash item was depreciations
a.What was the company’s net income?
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c.What was its net operating capital (NWC)?
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Last year Sanderson, Inc. had sales of
$3.1
million. The firm's cost of goods sold came to
$2.1
million, its operating expenses excluding depreciation of
$97,000
were
$392,000,
and the firm paid
$150,000
in interest on its bank loans. Also, the corporation received
$45,000
in dividend income (from a company in which it owned less than
20
percent of its shares) but paid
$22,000
in the form of dividends to its own common stockholders. Use the corporate tax rates shown in the popup window,
Taxable Income
Marginal Tax Rate
$0−$50,000
15%
$50,001−$75,000
25%
$75,001−$100,000
34%
$100,001−$335,000
39%
$335,001−$10,000,000
34%
$10,000,001−$15,000,000
35%
$15,000,001−$18,333,333
38%
Over $18,333,333
35%
,
to calculate the corporation's tax liability. What are the firm's average and marginal tax rates?
(Corporate income tax) Last year Sanderson, Inc. had sales of $3.2 million. The firm's cost of goods sold came to $2.2 million, its operating
expenses excluding depreciation of $98,000 were $408,000, and the firm paid $146,000 in interest on its bank loans. Also, the corporation received
$48,000 in dividend income (from a company in which it owned less than 20 percent of its shares) but paid $22,000 in the form of dividends to its
own common stockholders. Use the corporate tax rates shown in the popup window,, to calculate the corporation's tax liability. What are
the firm's average and marginal tax rates?
The firm's tax liability for the year is $
(Round to the nearest dollar.)
Chapter 2 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 2.A - Prob. 1QTDCh. 2.A - Prob. 2QTDCh. 2.A - Prob. 3QTDCh. 2.A - Prob. 1PCh. 2.A - Prob. 2PCh. 2.A - Prob. 3PCh. 2.A - Prob. 4PCh. 2.A - Prob. 5PCh. 2.A - Prob. 6PCh. 2.A - Prob. 7P
Ch. 2.A - Prob. 8PCh. 2 - Prob. 1QTDCh. 2 - Prob. 2QTDCh. 2 - Prob. 3QTDCh. 2 - Prob. 4QTDCh. 2 - Prob. 5QTDCh. 2 - Prob. 6QTDCh. 2 - Prob. 7QTDCh. 2 - Prob. 8QTDCh. 2 - Prob. 9QTDCh. 2 - Prob. 10QTDCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13P
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