FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- A. 20Y5 Annual net cash flow is incorrect. B. Present value of annual net cash flow Less investment are incorrect. a. For each year, subtract the driver salaries and operating costs from the revenues. For 20Y3 only, add the residual value. b. Multiply the present value of $1 factor for each year by that year's net cash flow (from a). Subtract the amount to be invested from the total present value of the net cash flow.arrow_forwardWorking needarrow_forwardWhat is the annual after-tax operating cash flow? Table 3 Initial Equipment Project Life Sales Variable Costs Fixed Costs Tax rate Cost of Capital Ending Book Value Sales Price at Year 3 Net Working Capital $24,700 O $13,300 $32,250 $19,300 $55,000 3 Years $50,000 $20,000 $10,000 35% 10% $1,000 $20,000 $10,000arrow_forward
- Nonearrow_forwardThe following information pertains to Travis Concrete: Sales revenue $2,000,000 Gross margin 700,000 100,000 550,000 Income Invested capital The company's imputed interest rate is 8%. The capital turnover is: Multiple Choice 27.50. 3.64. 20.00.arrow_forwardHelp Saved ent i-Chapter 4O Provincial Inc. reported the following before-tax income statement itemns: $540, 000 Operating income Nonoperating losses (89,000) Provincial has a 25% income tax rate. Provincial would report the following amount of income tax expense as a separately stated line item in the income statement: Multiple Choice $11.000 Prev 1 of 15 Next >arrow_forward
- Gross Profit from Operations Tax Exempt Interest Capital gains Capital Loss carryforward Compensation expense Depreciation: Tax=$8,000/ E&P=$6,500 Other expenses Total Expense Book/ Taxable Income (1) Federal Income Tax (21%) Book Income $100,000 10,000 5,000 0 Total Income $115,000 $-12,000 30,000 6,000 10,000 46,000 (2) 69,000 M-1s 0 -10,000 0 -2000 0 2,000 0 2,000 -14,000 (3) Tax Income $100,000 0 5000 -2000 $103,000 30,000 8,000 10,000 48,000 55,000 0 After making your adjustments, what is ABC Corporation's current year E&P? (4) E&P Adjustment 0 0 n/a 0 0 n/a n/aarrow_forward($ thousands) Present value at 19% Net cash flow Net present value 0 1 4 -13,700 -1,594 -13,700 -1,339 3,541 (sum of PVs). Period 2 3 6 3,057 6,433 10,644 10,095 5,867 2,159 3,817 5,308 4,230 2,066 5 7 3,379 1,000 Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 19% nominal rate and 11% expected inflation. NPV should be unchanged at +3,541, or $3,541,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows NPVarrow_forwardBaghibenarrow_forward
- Assignment: Chapter 11 Cost of Capital Attempts 2. An overview of a firm's cost of debt Keep the Highest/3 To calculate the after-tax cost of debt, multiply the before-tax cost of debt by Three Waters Company (TWC) can borrow funds at an interest rate of 12.50% (2+T)od of four years. Its marginal federal-plus-state tax rate is 40%. TWC's after-tax cost of debt is (rounded to two decimal(1-T) At the present time, Three Waters Company (TWC) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,278.41 per bond, carry a coupon rate of 11%, and distribute annual coupon payments. The company incurs a federal- plus-state tax rate of 40%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to tw decimal places)? O4.22% O 3.80 % O 5.06% 4.85%arrow_forwardYears Revenue Cash Expense Book Depreciation Book Income Pre-Tax Book Tax at 32% After Tax Book Income Financial Measures Profit Margin % Net Assets ROA % Cashflow Revenue Cash Expense Tax Depreciation Pretax Income Tax at 32% After Tax Income After Tax Cashflow Cumulative Cashflow Payback Period Present Worth 10 PW12 PW15 IRR PV Index(15) Facility Cost Income Tax Rate 0 C. -9.5 d. -12.4 $ 100,000.00 2.2 Years 91740.92679 0.395702526 1 0.684350818 $ 100,000.00 32% $30,000.00 $100,000.00 $120,000.00 $140,000.00 $150,000.00 $150,000.00 $50,000.00 $60,000.00 $70,000.00 $75,000.00 $75,000.00 2 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $0.20 $20,400.00 $27,200.00 $0.26 $9,600.00 $12,800.00 $16,000.00 $17,600.00 $17,600.00 $20,400.00 ($100,000.00) $40,400.00 $51,040.00 ($100,000.00) -$59,600.00 -$8,560.00 $40,000.00 $50,000.00 $55,000.00 $55,000.00 $0.23 3 $0.45 $36,727.27 $80,000.00 $60,000.00 $40,000.00 $20,000.00 $0.85 $1.87 4 $19,040.00 5 $34,000.00 $37,400.00 $0.24…arrow_forward5 Edmonds Industries is forecasting the following income statement: Sales Operating costs (excl. Depr. & Amort.) EBITDA Depreciation EBIT Interest EBT Taxes (40%) Net income $10,000,000 5,500,000 4,500,000 1,200,000 $ 3,300,000 500,000 $ 2,800,000 1,120,000 $ 1,680,000 The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,100,000 in net income?arrow_forward
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