EBK FINANCIAL MANAGEMENT: THEORY & PRAC
15th Edition
ISBN: 9781305886902
Author: EHRHARDT
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 2, Problem 11P
a)
Summary Introduction
To determine: The company B’s expected net income and its expected net cash flow.
b)
Summary Introduction
To determine: The impact on reported profit and to net cash flow if depreciation doubled.
c)
Summary Introduction
To determine: The impact on reported profit and to net cash flow if depreciation halved.
d)
Summary Introduction
To determine: whether it is better to double or half the depreciation expense.
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The Berndt Corporation expects to have sales of $12 million. Costs other thandepreciation are expected to be 75% of sales, and depreciation is expected tobe $1.5 million. All sales revenues will be collected in cash, and costs otherthan depreciation must be paid for during the year. Berndt’s federal-plusstate tax rate is 40%. Berndt has no debt.a. Set up an income statement. What is Berndt’s expected net income? Itsexpected net cash flow?
The Berndt Corporation expects to have sales of $15 million. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to be $1.5 million. All
sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt.
The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.
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a. Set up an income statement. What is Berndt's expected net cash flow? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as
1,200,000. Round your answer to the nearest dollar.
$
b. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What is Berndt's expected net cash flow?
Round your answer to the nearest dollar.
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c. Now suppose that Congress changed the…
The Berndt Corporation expects to have sales of $12 million. Costs other than depreciation are expected to be 60% of sales, and
depreciation is expected to be $2.4 million. All sales revenues will be collected in cash, and costs other than depreciation must be
paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt. The data has been collected in the
Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.
X
Open spreadsheet
Chapter 2 Solutions
EBK FINANCIAL MANAGEMENT: THEORY & PRAC
Ch. 2 - Define each of the following terms:
Annual report;...Ch. 2 - Prob. 2QCh. 2 - If a typical firm reports 20 million of retained...Ch. 2 - What is operating capital, and why is it...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3P
Ch. 2 - Prob. 4PCh. 2 - Kendall Corners Inc. recently reported net income...Ch. 2 - In its most recent financial statements,...Ch. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 1MCCh. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 6MCCh. 2 - Prob. 7MCCh. 2 - Prob. 8MCCh. 2 - Prob. 9MCCh. 2 - Prob. 10MC
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