Francis Roman
FIN100.2
Chapter 2
1. Given
Current Assets
$4,000
Current Liabilities
$3,400
Net Fixed Assets
$22,500
Longterm Debt
$6,800
$26,500
$10,200
Equation
Share Holder's Equity
$26,500
$4,000
$10,200
$3400
Solution
$16300
$600
2. Given
sales = $634,000
costs = $305,000
tax rate = 35%
depreciation = $46,000
interest expense = $29,000
Equation
sales
634000
 costs
305000
 expenses
46000
29000
254000
 tax rate
 .35
88900
Solution
net income =
$165,100
3. Given
same problem from #2, with $86,000 dividends
Equation
Addition to retained earnings = Net income  Cash dividends
165,100  86,000 = 79,100
Solution
Addition to retained earnings = $79,100
4. Given
Firm had $30,000 shares of common stock outstanding
Equation
EPS= net income/total shares outstanding
Dividends per share = Cash dividends / Common stock outstanding
Solution
165,100/30,000 = $5.50 EPS
86,000/30,000 = 2.87 DPS
5. Given
Net Working Capt: Book = $410k
Market = 1.8 M
Net Fixed Assets: Book = 7 M
Market = 3.7 M
Equation
Net Working Capt + Net Fixed Assets = Book/Market Value
Capital
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Solution
Book: 410k + 7 M = 7.410 M
Market: 1.8 M + 3.7 M = 5.5 M
6. Given
Taxable Income
$325000
Equation
.15 * 50,000
$7500
.25 * 25,000
$6250
Solution
.34 * 25,000
$8500
.39 * 225,000
$87750
Income Taxes
$110000
7. Given
total taxes = $110,000, taxable income = $325,000
Equation
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 Spring '08
 staff
 Depreciation, Debt, Generally Accepted Accounting Principles, net fixed assets, OCF Net

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