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3. Orange Company recently reported $10,500 of sales, $4,000 of operating costs other than depreciation, and $2,500 of depreciation. It had $4,000 of bonds outstanding that carry a 7%interest rate, and its tax rate was 35%. How much was the firm's earnings before taxes and interes (EBIT)? $ 4,000 $ 3,720 O $2,418 $ 7,418 None of the above

3. Orange Company recently reported $10,500 of sales, $4,000 of operating costs other than depreciation, and $2,500 of depreciation. It had $4,000 of bonds outstanding that carry a 7%interest rate, and its tax rate was 35%. How much was the firm's earnings before taxes and interes (EBIT)? $ 4,000 $ 3,720 O $2,418 $ 7,418 None of the above

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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3. Orange Company recently reported $10,500 of sales, $4,000 of operating costs other than depreciation, and $2,500 of depreciation. It had $4,000 of bonds outstanding that carry a 7%interest rate, and its tax rate was 35%. How much was the firm's earnings before taxes and interest (EBIT)? * $ 4,000 $ 3,720 $ 2,418 $ 7,418 None of the above
Transcribed Image Text:3. Orange Company recently reported $10,500 of sales, $4,000 of operating costs other than depreciation, and $2,500 of depreciation. It had $4,000 of bonds outstanding that carry a 7%interest rate, and its tax rate was 35%. How much was the firm's earnings before taxes and interest (EBIT)? * $ 4,000 $ 3,720 $ 2,418 $ 7,418 None of the above
1. Gert. Co recently reported $10,750 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. During the year, the firm had expenditures on fixed assets and net working capital that totaled $1,550. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. What was its free cash flow? * $1,873 $1,972 $2,076 $2,300 O None of the above 2. ABC company sells an old piece of equipment for $5,000 cash. At the same moment, it buys a new truck for $25,000. It paid also $2000 as dividends to its shareholders. The cash flow from investing activities for this company is: * S-20,000 $-22,000 $ 20,000 $-30,000
Transcribed Image Text:1. Gert. Co recently reported $10,750 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. During the year, the firm had expenditures on fixed assets and net working capital that totaled $1,550. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. What was its free cash flow? * $1,873 $1,972 $2,076 $2,300 O None of the above 2. ABC company sells an old piece of equipment for $5,000 cash. At the same moment, it buys a new truck for $25,000. It paid also $2000 as dividends to its shareholders. The cash flow from investing activities for this company is: * S-20,000 $-22,000 $ 20,000 $-30,000
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