Ch 2 Prac Quiz

Ch 2 Prac Quiz - Homework Manager - FIN 301 - Section 1

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Question 1: Score 0/1 Your response Correct response Building an Income Statement Fyre, Inc., has sales of $580,000, costs of $270,000, depreciation expense of $78,000, interest expense of $48,000, and a tax rate of 36 percent. The net income for this firm is $ 245200 (0%). (Omit the "$" sign in your response.) Building an Income Statement Fyre, Inc., has sales of $580,000, costs of $270,000, depreciation expense of $78,000, interest expense and a tax rate of 36 percent. The net income for this firm is $ 117,760 with a tolerance of ± 0 the "$" sign in your response.) Total grade: 0.0×1/1 = 0% Feedback: The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to get taxable income, and then subtract taxes to arrive at net income. Doing so, we get: Income Statement Sales $ 580,000 Costs 270,000 Depreciation 78,000 EBIT $ 232,000 Interest 48,000 Taxable income $ 184,000 Taxes 66,240 Net income $117,760 Question 2: Score 0/1 Your response Correct response Market Values and Book Values Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $3 million. The machinery can be sold to the Romulans today for $1.6 million. Klingon's current balance sheet shows net fixed assets of $2 million, current liabilities of $1,000,000, and net working capital of $510,000. If all the current assets were liquidated today, the company would receive $1.3 million cash. (Enter answers in dollars, not millions of dollars. Omit the "$" sign in your response.) The book value of Klingon's assets today is $ 1510000 (0%) and the market value is $ 1300000 (0%). Market Values and Book Values Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $3 million. The machinery to the Romulans today for $1.6 million. Klingon's current balance sheet shows net fixed assets of $2 mil liabilities of $1,000,000, and net working capital of $510,000. If all the current assets were liquidated company would receive $1.3 million cash. (Enter answers in dollars, not millions of dollars. Omit th in your response.) The book value of Klingon's assets today is $ 3,510,000 and the market value is $ 2,900,000 . Total grade: 0.0×1/2 + 0.0×1/2 = 0% + 0% Feedback: To find the book value of assets, we first need to find the book value of current assets. We are given the NWC. NWC is the difference between current assets and current liabilities, so we can use this relationship to find the book value of current assets. Doing so, we find: NWC = Current assets - Current liabilities Current assets = $510,000 + 1,000,000 = $1,510,000 Now we can construct the book value of assets. Doing so, we get: Book value of assets Current assets $ 1,510,000 Fixed assets 2,000,000 Total assets $ 3,510,000 All of the information necessary to calculate the market value of assets is given, so: Market value of assets Current assets $ 1,300,000 Fixed assets 1,600,000 Total assets $ 2,900,000 Question 3: Score 1/1 Your response Correct response Calculating Taxes The Fly Leaf Co. had $313,000 in taxable income. Using the rates from the table below, the company's income taxes are $ 105320 (100%). (Omit the "$" sign in your response.) Taxable Income Tax Rate $0 - 5 0 , 0 0 0 1 5 % 50,001 - 75,000 25 75,001 - 100,000 34 100,001 - 335,000 39 335,001 - 10,000,000 10,000,001 - 15,000,000 35 15,000,001 - 18,333,333 38 18,333,334 + Calculating Taxes The Fly Leaf Co. had $313,000 in taxable income. Using the rates from the table below, the compan taxes are $ 105320 . (Omit the "$" sign in your response.) Taxable Income
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Ch 2 Prac Quiz - Homework Manager - FIN 301 - Section 1

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