am. 124. As the chief financial officer of Adirondack Designs, you have the following information:Next year's expected net income after tax but before new financingSinking-fund payments due next year on the existing debtInterest due next year on the existing debtCommon stock price, per shareCommon shares outstandingCompany tax rate$ 48 million$ 23 million$ 18 million$ 32.028 million40%a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $58 million of new debt at an interest rateof 3 percent.b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal$4.5 million.c. Calculate next year's earnings per share assuming Adirondack raises the $58 million of new debt.d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.3 millionnew shares at $25 a share instead of raising new debt.Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1decimal place.a. Times interest earnedb. Times burden coveredc. Earnings per shared. Times interest earnedd. Times burden coveredd. Earnings per share

Next year expected net income after tax but before new financing$48.00Sinking fund payment due next…

Answered: Next year's expected net income after…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 8QE

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Brower Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is 2,000,000.
As the chief financial officer of Adirondack Designs, you have the following information: Next year's expected net income after tax but before new financing Sinking-fund payments due next year on the existing debt Interest due next year on the existing debt Common stock price, per share Common shares outstanding Company tax rate $ 38 million $ 13 million $8 million $ 27.0 18 million 30% a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $48 million of new debt at an interest rate of 4 percent. b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.5 million. c. Calculate next year's earnings per share assuming Adirondack raises the $48 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 1.3 million new shares at $23 a share instead of raising new debt. Note: Do not round…
As the chief financial officer of Adirondack Designs, you have the following information: Next year’s expected net income after tax but before new financing $ 51 million Sinking-fund payments due next year on the existing debt $ 26 million Interest due next year on the existing debt $ 21 million Common stock price, per share $ 33.5 Common shares outstanding 31 million Company tax rate 35% Calculate Adirondack’s times-interest-earned ratio for next year assuming the firm raises $61 million of new debt at an interest rate of 2 percent. Calculate Adirondack’s times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.0 million. Calculate next year’s earnings per share assuming Adirondack raises the $61 million of new debt. Calculate next year’s times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at $22 a share instead of raising new debt.
As the chief financial officer of Adirondack Designs, you have the following information: • Next year's expected net income after tax but before new financing $42 million Sinking-fund payments due next year on the existing debt $15 million • Interest due next year on the existing debt $10 million • Common stock price, per share $28.00 • Common shares outstanding 20 million Company tax rate 30% Calculate the firm's times-interest-earned ratio for next year assuming the firm raises $50 million of new debt at an interest rate of 4 percent. 5.83 4.21 ○ 6.38 O 1.25
22.As the chief financial officer of Adirondack Designs, you have the following information- Next year's expected net incone after tax but before new financing Sinking-fund paynents due next year on the existing debt interest due next year on the existing debt Common stock price, per share comnon shares outstanding company tax rate ( 51 nituion 5 26 million 521 nition 533.5 31 mition35ka. Coiculate Adirondack's times-interest-earned ratio for next year assuming the firm raises$61million of new debt at an interest rate of 2 percent. b. Calculote Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund poyments on the new debt wil equal$3.0milion. c. Calculate next year's earnings per share assuming Adirondack raises the$61millon of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at$22a share instead of raising new debt Note: Do not round intermediate…
An overview of a firm's cost of debt 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 10.20% for a period of six years. Its marginal federal-plus-state tax rate is 25%. TWC’s after-tax cost of debt is (rounded to two decimal places). 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 $1,495.56 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 3.38% 2.35% 2.94% 3.53%
Rhodes Corporation’s financial statements are shown after part f. Suppose the federalplus- state tax corporate tax is 25%. Answer the following questions.a. What is the net operating profit after taxes (NOPAT) for 2020?b. What are the amounts of net operating working capital for both years?c. What are the amounts of total net operating capital for both years?d. What is the free cash flow for 2020?e. What is the ROIC for 2020?f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.)
Suppose that LilyMac Photography expects EBIT to be approximately $94,000 per year for the foreseeable future, and that it has 400 10-year, 4 percent annual coupon bonds outstanding. (Use Table 11.1) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate Mc. Type here to search 7730
Aneles Inc.’s Balance Sheet as of December 31, 2020 is as follows: In 2020, the company reported sales of 3,000,000, Net Income of 60,000, and dividends of 10,000. Sales are projected to increase by 10% next year. Both Profit Margin and the Dividend Pay-Out Ratio will remain the same. Operations are at full capacity. Assume external fund will be raised through issuances of Long-Term Obligations or Bonds. A. How much Long-term Debt will the company have to issue next year? B. If the operations are not in full capacity, what will be AFN?
You are given the following table showing the end of year net debt for a target firm. The cost of net debt is 8.2 percent, and the corporate tax rate is 21 percent. Calculate the present value of the tax shield generated in the four- year period. Year End of Year Net Debt O $81,347 O $26,898 O $21,624 O $102,970 0 $192,500 1 2 7 3 4 $207,000 $390,000 $455,000 $510,000
Other relevant information about the company follows: The 20-year Treasury Bond rate is currently 4.5 percent and you have estimated market-risk premium to be 6.75 percent using the returns on stocks and Treasury bonds from 2010 to 2019. Pharmos Incorporated has a marginal tax rate of 25 percent. Required: Answer the following questions given the information above Calculate to the following for Pharmos considering its tax rate of 25%: i) Cost of Equity (answer in %)
1. An overview of a firm's cost of debt 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 9.70% for a period of six years. Its marginal federal-plus-state tax rate is 25%. TWC's after-tax cost of debt is (rounded to two decimal places). At the present time, Three Waters Company (TWC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal- plus-state tax rate of 25%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 5.48% 4.87% 7.00% 6.09%

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