EBK FOUNDATIONS OF FINANCE
10th Edition
ISBN: 9780135160473
Author: KEOWN
Publisher: PEARSON CO
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Chapter 7, Problem 17SP
Summary Introduction
To determine: The expected
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Free Cash Flow
Use the financial statements shown here for Lan & Chen Technologies. The federal-plus-state tax rate is 25%.
Lan & Chen Technologies: Income Statements for Year Ending December 31
(Thousands of Dollars)
2023
2022
Sales
$960,000
$900,000
Expenses excluding depreciation and amortization
820,000
774,000
EBITDA
$140,000
$126,000
Depreciation and amortization
33,000
31,500
EBIT
$107,000
$94,500
Interest Expense
10,000
8,900
EBT
$97,000
$85,600
Taxes (25%)
24,250
21,400
Net income
$72,750
$64,200
Common dividends
$43,000
$41,230
Addition to retained earnings
$29,750
$22,970
Lan & Chen Technologies: December 31 Balance Sheets
(Thousands of Dollars)
Assets
2023
2022
Cash and cash equivalents
$48,250
$45,000
Short-term investments
3,200
3,600
Accounts Receivable
280,500
270,000
Inventories
141,000
135,000
Total current assets
$472,950
$453,600
Net fixed assets
360,750
315,000
Total assets…
The Talley Corporation had taxable operating income of $365,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $50,000, (2) dividends received of $25,000, and (3) dividends paid of $35,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt.
What is the firm’s taxable income?
What is the tax expense?
What is the after-tax income?
Chapter 7 Solutions
EBK FOUNDATIONS OF FINANCE
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - a. How does a bonds par value differ from its...Ch. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Define the expected rate of return to bondholders.
Ch. 7 - (Bond valuation) Bellingham bonds have an annual...Ch. 7 - (Bond valuation) Flora Co.s bonds, maturing in 7...Ch. 7 - (Bond valuation) You own a 20-year, 1,000 par...Ch. 7 - (Bond valuation) Calculate the value of a bond...Ch. 7 - (Bond valuation) At the beginning of the year, you...Ch. 7 - Prob. 6SPCh. 7 - (Bond relationship) Mason, Inc. has two bond...Ch. 7 - Prob. 8SPCh. 7 - (Bond valuation) National Steels 15-year, 1,000...Ch. 7 - (Bond valuation) You own a bond that pays 70 in...Ch. 7 - Prob. 11SPCh. 7 - (Bond valuationzero coupon) The Latham Corporation...Ch. 7 - (Bond valuation) Bank of America has bonds that...Ch. 7 - Prob. 15SPCh. 7 - Prob. 16SPCh. 7 - Prob. 17SPCh. 7 - (Bondholders expected rate of return) You own a...Ch. 7 - (Expected rate of return and current yield) Time...Ch. 7 - (Expected rate of return and current yield)...Ch. 7 - Prob. 21SPCh. 7 - Prob. 22SPCh. 7 - (Current yield) Assume you have a bond with a...Ch. 7 - Prob. 24SPCh. 7 - (Expected rate of return) Assume you own a bond...Ch. 7 - Prob. 26SPCh. 7 - (Bondholders expected rate of return) You...Ch. 7 - Prob. 1MCCh. 7 - Assume that the bonds are selling for the...Ch. 7 - Prob. 3MCCh. 7 - Prob. 4MCCh. 7 - Prob. 5MC
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