FIN300 Quiz 1 solutions Spr2019.pdf - FIN 300 QUIZ 1...

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FIN 300 QUIZ 1 SOLUTIONS* HOFFMAN Spring 2019 1. Sales 700,000 Cogs 290,000 GP 410,000 OE 175,000 (25% of 700,000) EBIT 235,000 INT 7,000 EBT 228,000 DIV 12,000 LTCG 10,000 (55,000 45,000) EBT $250,000 2. 22,250 + .39(250,000 - 100,000) = $80,750 = tax liability 3. Since interest expense is tax deductible and Builtrite is in the 39% marginal tax bracket, the after-tax cost of the interest is 7000(1-.39) = $4,270 or 7000 (7000 X .39) = 4,270. 4. If the capital loss was $60,000 or $70,000 and the capital gain was still

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