Homework Solutions Chapters 2-4

Homework Solutions Chapters 2-4 - Chapter 2 Question 1...

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Chapter 2 Question 1 Input area: Current assets $4,000 Net fixed assets 22,500 Current liabilities $3,400 Long-term debt 6,800 Output area: Balance sheet Current assets $4,000 Current liabilities Net fixed assets 22,500 Long-term debt Owner's equity Total liabilities Total assets $26,500 +total equity Owner's equity = Total assets +Total liabilities = Net working capital = Current assets - Current liabilities =
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$3,400 6,800 16,300 $26,500 $16,300 $600
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Chapter 2 Questions 2-4 Input area: Sales $634,000 Costs 305,000 Depreciation expense 46,000 Interest expense 29,000 Tax rate 35% Cash dividends $86,000 Common Stock 30,000 Output area: Income Statement Sales $634,000 Costs 305,000 Depreciation expense 46,000 EBIT 283,000 Interest expense $29,000 EBT $254,000 Taxes $88,900 Net income $165,100 Addition to retained earnings = Net income - Cash div Earnings per share = Net income / Common stock ou Dividends per share = Cash dividends / Common sto
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ividends = $79,100 utstanding = $5.50 ock outstanding = $2.87
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Chapter 2 Question 8 Input area: Sales $14,200 Costs 5,600 Depreciation Expense 1,200 Interest Expense 680 Tax rate 35% Output area: Income Statement Sales $14,200 Costs 5,600 Depreciation expense 1,200 EBIT 7,400 Interest expense $680 EBT $6,720 Taxes $2,352 Net income $4,368 Operating cash flow = EBIT + Depreciation - Taxes = $6,248.00
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Chapter 2 Questions 14 Input area: Sales $162,000 Costs 93,000 Other expenses 5,100 Depreciation expense 8,400 Interest expense 16,500 Taxes 14,820 Dividends 9,400 2007 New equity $7,350 Net new long-term debt (6,400) Change in fixed assets 12,000 Output area: Income Statement Sales $162,000 Costs 93,000 Depreciation expense 8,400 Other expenses 5,100 EBIT 55,500 Interest expense $16,500 EBT $39,000 Taxes 14,820 Net income $24,180 Dividends $9,400 Addition to retained earnings $14,780 a. Operating cash flow $49,080 b. Cash flow to creditors $22,900 c. Cash flow to stockholders $2,050 d. Cash flow from assets $24,950 Net capital spending 20,400 Change in NWC $3,730
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Chapter 2 Questions 18 Input area: Corporation growth taxable income $82,000 Corporation income taxable income 8,200,000 Taxable income 0 - 50,000 15% 50,001 - 75,000 25% 75,001 - 100,000 34% 100,001 - 335,000 39% 335,001 - 10,000,000 34% 10,000,001 - 15,000,000 35% 15,000,001 - 18,333,333 38% 18,333,334 + 35% Output area: Corporation Growth: Taxes: 15% $50,000 25% 25,000 34% 7,000 39% 0 34% 0 35% 0 38% 0 35% 0 $16,130 With a marginal tax rate of 34%, the tax on an Corporation Income: Taxes: 15% $50,000 25% 25,000 additional $10,000 would be $3,400 .
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25,000 39% 235,000 34% 7,865,000 35% 0 38% 0 35% 0 $2,788,000 With a marginal tax rate of 34%, the tax on an The tax bills on an additional $10,000 are the same because each firm has a marginal tax rate of 34%, despite their different average tax rates. additional $10,000 would be
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This note was uploaded on 09/20/2009 for the course BUAD 14784 taught by Professor Westerfield during the Fall '09 term at USC.

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Homework Solutions Chapters 2-4 - Chapter 2 Question 1...

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