PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 28, Problem 25PS
Summary Introduction
To discuss: The reason why reducing tax shield and an alternative to be use as a measure of cost of capital and reducing the
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Where can I find after tax interest income on a balance sheet or income statement(trying to find Economic Value added after-tax interest+net income-(cost of capital))? I have work that only shows interest expense before finding EBT. Do we use interest expense?
QUESTION:
A person wonders why the profit after tax is not the same as the cash flows from operating activities. Explain to a person two reasons why these two numbers are usually different and provide an example for each difference?
What is internal Rate of Return - Before Tax Cash Flow - BTIRR? Please provide example.
Chapter 28 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 28 - Prob. 1PSCh. 28 - Performance measures Keller Cosmetics maintains an...Ch. 28 - Performance measures Table 28.8 gives abbreviated...Ch. 28 - Performance measures Describe some alternative...Ch. 28 - Financial ratios Look again at Table 28.8, which...Ch. 28 - Prob. 6PSCh. 28 - Financial ratios True or false? a. A companys...Ch. 28 - Financial ratios Sara Togas sells all its output...Ch. 28 - Financial ratios As you can see, someone has...Ch. 28 - Prob. 10PS
Ch. 28 - Prob. 11PSCh. 28 - Prob. 12PSCh. 28 - Prob. 13PSCh. 28 - Prob. 14PSCh. 28 - Prob. 15PSCh. 28 - Prob. 16PSCh. 28 - Prob. 17PSCh. 28 - Prob. 18PSCh. 28 - Prob. 19PSCh. 28 - Prob. 20PSCh. 28 - Prob. 21PSCh. 28 - Prob. 22PSCh. 28 - Prob. 23PSCh. 28 - Prob. 25PSCh. 28 - Prob. 26PSCh. 28 - Prob. 27PS
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- What is the advantage of Making versus Buying? Give a scenario and explain the effect focusing on tax implications.arrow_forwardj. calculate the EBIT: calculate the net income: calculate the OCF: what is the depreciation tax shield:arrow_forwardThe after tax cash flow requires more computation than the before tax cash flow evaluation? True Falsearrow_forward
- EBITD is equivalent to profits after taxes. true or false?arrow_forwardDo you believe that the cash flows from the sale of an investment should also include the tax effect of the sale? Explain. Do you believe the cash flows from investing activities should include not only the return of investment, but also the return on investment, that is the interest and dividend revenue? Explain.arrow_forwardwhy are the operating taxes in the FCF analysis calculating without taking into account the tax shield on interest?arrow_forward
- How is the compressed adjusted present value (APV) model different from the Modigliani and Miller models? (Hint: consider the tax shield's discount rate.) What about this model is "condensed"?)arrow_forwardWhat are FUTA and SUTA taxes? Is there any possible reduction in the FUTA tax rate? If so, what is the reduction, and how is this determined?arrow_forwardSelect the best answer. An example of investment income that would be subject to the net investment income tax is: O A. Rental and royalty income O B. Tax-exempt interest O C. Wages O D. Self-employment income Submit Answersarrow_forward
- Paulo Jr. wonders why the profit after tax is not the same as the cash flows from operating activities. Explain to Paulo Jr. two reasons why these two numbers are usually different and provide an example for each difference?arrow_forwardiii. Paulo Jr. wonders why the profit after tax is not the same as the cash flows from operating activities. Explain to Paulo Jr. two reasons why these two numbers are usually different and provide an example for each difference?arrow_forwardWhy isn’t accounting net income used in the net present value method of making capitalbudgeting decisions?arrow_forward
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