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Chapter 2 Homework

# Chapter 2 Homework - Francis Roman FIN100.2 Chapter 2 1...

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Francis Roman FIN100.2 Chapter 2 1. Given Current Assets \$4,000 Current Liabilities \$3,400 Net Fixed Assets \$22,500 Long-term 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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