finance ch.3 - Points Earned: 5.0/5.0 Correct Answer(s): C...

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14.  Edge Brothers reported net income of $385,000, its interest expense was $200,000, and its tax rate is 40%. If Edge could double its operating income (EBIT), what would have been the company's net income, all else equal? A)  $1,100,000 B)  $ 920,000 C)  $ 890,000 D)  $ 770,000 E)  $1,275,000 Points Earned:  0.0/5.0  Correct Answer(s): C 15.  Miller Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges, it had $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was its net cash flow ? A)  $2,545 B)  $2,471 C)  $2,232 D)  $2,618 E)  $2,380
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Unformatted text preview: Points Earned: 5.0/5.0 Correct Answer(s): C 16. Companies generate income from their "regular" operations and from things like interest on securities they hold, which is called non-operating income. Mitel Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges and no non-operating income. It had issued $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the firm's operating income, or EBIT? A) $1,400 B) $1,100 C) $1,200 D) $1,500 E) $1,300 Points Earned: 5.0/5.0 Correct Answer(s): D...
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This note was uploaded on 11/04/2009 for the course BUS FIN 2100 taught by Professor Shmidl during the Spring '09 term at Laramie County Community College.

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finance ch.3 - Points Earned: 5.0/5.0 Correct Answer(s): C...

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