Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Textbook Question
Chapter 6, Problem 11P
The Berndt Corporation expects to have sales of $12 million. Costs other than
- a. Set up an income statement. What is Berndt’s expected net income? Its expected net cash flow?
- b. Suppose Congress changed the tax laws so that Berndt’s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?
- c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndt’s depreciation, it was reduced by 50%. How would profit and net cash flow be affected?
- d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
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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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Open spreadsheet
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.
$
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 6 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 6 - Prob. 2QCh. 6 - If a “typical” firm reports $20 million of...Ch. 6 - Prob. 4QCh. 6 - What is operating capital, and why is it...Ch. 6 - Explain the difference between NOPAT and net...Ch. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 1PCh. 6 - Corporate bonds issued by Johnson Corporation...Ch. 6 - Prob. 3P
Ch. 6 - Talbot Enterprises recently reported an EBITDA of...Ch. 6 - Kendall Corners Inc. recently reported net income...Ch. 6 - In its most recent financial statements,...Ch. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - The Moore Corporation has operating income (EBIT)...Ch. 6 - The Berndt Corporation expects to have sales of 12...Ch. 6 - Prob. 12PCh. 6 - What effect did the expansion have on sales and...Ch. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - What is Computron’s free cash flow (FCF)? What are...Ch. 6 - Calculate Computron’s return on invested capital...Ch. 6 - Cochran also has asked you to estimate Computrons...Ch. 6 - Prob. 8MCCh. 6 - Assume that a corporation has $100,000 of taxable...Ch. 6 - Prob. 10MC
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