{"id":132062,"date":"2023-08-19T15:03:59","date_gmt":"2023-08-19T15:03:59","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/abcs-ebit-is-9-million\/"},"modified":"2023-08-19T15:03:59","modified_gmt":"2023-08-19T15:03:59","slug":"abcs-ebit-is-9-million","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/abcs-ebit-is-9-million\/","title":{"rendered":"Abc’s ebit is $9 million"},"content":{"rendered":"
\n

Question 1 <\/span><\/strong><\/p>\n

    \n
  1. ABC’s EBIT is $9 million. The depreciation expense is $0.5 million and interest expense is $0.5 million. The corporate tax rate is 30%. The company has 12 million in operating current assets and $6 million operating current liabilities. It has $5 million in net plant and equipment. The after-tax cost of capital (WACC) is 15%. Assume that the only non-cash item is depreciation. The total net operating capital last year was $8 million.<\/span><\/li>\n<\/ol>\n

    What was the company\u2019s free cash flow for the year?<\/span><\/p>\n

    Question 2<\/h3>\n

    1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>Based on the following information, Compute the transfer to Retained Earnings for Year 2006. Assume a tax rate of 34%.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    \n

    \u00a0<\/span><\/p>\n<\/td>\n

    		\n

    Year 2006<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Sales<\/span><\/p>\n<\/td>\n

    		\n

    $4800<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Depreciation<\/span><\/p>\n<\/td>\n

    		\n

    577<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    COGS<\/span><\/p>\n<\/td>\n

    		\n

    1582<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Other Expenses<\/span><\/p>\n<\/td>\n

    		\n

    580<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Interest<\/span><\/p>\n<\/td>\n

    		\n

    769<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Cash<\/span><\/p>\n<\/td>\n

    		\n

    2107<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    A\/R<\/span><\/p>\n<\/td>\n

    		\n

    2789<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Short-term Notes Payable<\/span><\/p>\n<\/td>\n

    		\n

    407<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Long-term Debt<\/span><\/p>\n<\/td>\n

    		\n

    7056<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Net Fixed Assets<\/span><\/p>\n<\/td>\n

    		\n

    17669<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    A\/P<\/span><\/p>\n<\/td>\n

    		\n

    2213<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Inventory<\/span><\/p>\n<\/td>\n

    		\n

    4959<\/span><\/p>\n<\/td>\n<\/tr>\n

    \n

    Dividends<\/span><\/p>\n<\/td>\n

    		\n

    612<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      \n
    1. \u00a0<\/li>\n<\/ol>\n

      3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>Note: Enter your answer rounded off to two decimal points. Do not enter $ in the answer box.\u00a0For example, if your answer is $12.345 then enter as 12.35 in the answer box.<\/span><\/em><\/p>\n

      Question 4<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>An investor recently purchased a corporate bond that yields 9.3%. The investor is in the 31% combined federal and state tax bracket. What is the bond’s after-tax yield?<\/p>\n

      Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.\u00a0For example, if your answer is 0.12345 then enter as 12.35 in the answer box.<\/p>\n

      Question 5<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC Inc. recently reported net income of $3,022 and depreciation of $522. What is the net cash flow?<\/p>\n

      Question 6<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC\u00a0recently reported $40,987 of sales, $16,382of operating costs other than depreciation, and $5,770 of depreciation.\u00a0 The company had no amortization charges and no non-operating income.\u00a0 It had $8,000 of bonds outstanding that carry a 5% interest rate. How much was the firm’s taxable income, or earnings before taxes (EBT)?<\/span><\/p>\n

      Hint: Interest rate = Bonds outstanding * interest rate<\/p>\n

      Question 9<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC corporation has operating income of $29,706. The company’s depreciation expense is $8,422. The company is all equity-financed and it faces a tax rate of 36%. What is the company’s net cash flow?<\/p>\n

      Question 11<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC Corporation had $80,019 of taxable income. Compute the tax liability.<\/p>\n

      Question 16<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC company had a taxable income of $203,601 from operations after all operating costs but before interest charges of $55,191, dividends received of $75,093, dividends paid of $5,000, and income taxes. What is the firm’s income tax liability?<\/span><\/p>\n

      Hint: use the tax table to compute taxes.<\/span><\/p>\n

      Question 17<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC company had a taxable income of $588,645 from operations after all operating costs but before interest charges of $58,760, dividends received of $56,349, dividends paid of $10,000, and income taxes. What is the firm’s income tax liability?<\/span><\/p>\n

      Hint: use the tax table to compute taxes.<\/span><\/p>\n

      Question 18<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>ABC company had a taxable income of $560,840 from operations after all operating costs but before interest charges of $56,242, dividends received of $64,389, dividends paid of $10,000, and income taxes. What is the firm’s after-tax income?<\/span><\/p>\n

      Hint: first use the tax table to compute taxes before calculating the after-tax income.<\/span><\/p>\n

      Question 22<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>During 2007,\u00a0ABC had sales of $79,365. Cost of goods sold, administrative expenses and selling expenses, and depreciation expenses were $23,155, $6,006, and $10,304, respectively. In addition, the company had an interest expense of $4,131, and a tax rate of 38%. The company paid$8,914 as dividends. If the retained earnings is 2006 were $59,011, what are the retained earnings in 2007?<\/span><\/p>\n

      Question 23<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>Corporate Bonds issued by ABC Corporation currently issued 10.8%. Municipal Bonds of equal risk currently yield 6.3%. At what tax rate would an investor be indifferent between these two bonds?<\/p>\n

      Question 24<\/h3>\n

      1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>Calculate the shareholders’ equity from the given information:<\/p>\n\n\n\n\n\n\n\n\n\n
      \n

      Cash<\/span><\/p>\n<\/td>\n

      		\n

      $2,155<\/span><\/p>\n<\/td>\n<\/tr>\n

      \n

      A\/R<\/span><\/p>\n<\/td>\n

      		\n

      $3,142<\/span><\/p>\n<\/td>\n<\/tr>\n

      \n

      Notes Payable<\/span><\/p>\n<\/td>\n

      		\n

      $382<\/span><\/p>\n<\/td>\n<\/tr>\n

      \n

      Long-term Debt<\/span><\/p>\n<\/td>\n

      		\n

      $8,232<\/span><\/p>\n<\/td>\n<\/tr>\n

      \n

      Net Fixed Assets<\/span><\/p>\n<\/td>\n

      		\n

      $18,091<\/span><\/p>\n<\/td>\n<\/tr>\n

      \n

      A\/P<\/span><\/p>\n<\/td>\n

      		\n

      $2,146<\/span><\/p>\n<\/td>\n<\/tr>\n

      \n

      Inventory<\/span><\/p>\n<\/td>\n

      		\n

      $5,096<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      \u00a0<\/p>\n

      \u00a0<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

      Question 1 ABC’s EBIT is $9 million. The depreciation expense is $0.5 million and interest expense is $0.5 million. The corporate tax rate is 30%. The company has 12 million in operating current assets and $6 million operating current liabilities. It has $5 million in net plant and equipment. The after-tax cost of capital (WACC) […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-132062","post","type-post","status-publish","format-standard","hentry","category-education"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/132062","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=132062"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/132062\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=132062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=132062"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=132062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}