FINANCE
HW # 4 (2)

# HW # 4 (2) - Fin 3301 Practice for chapter 4 Problem 1...

• Notes
• 4
• 33% (3) 1 out of 3 people found this document helpful

This preview shows pages 1–4. Sign up to view the full content.

Fin 3301 Practice for chapter 4 Problem # 1 Bargain Basement Stores reported the following information from their financial statements: Operating income (EBIT) = \$16 million. Interest payments = \$2.25 million. Dividend income = \$0.8 million. Calculate Bargain Basement Stores total tax liability using the corporate tax schedule below: Percentage on Taxable Income Excess above Base \$0-\$50,000 15% \$50,000-\$75,000 25 \$75,000-\$100,000 34 \$100,000-\$335,000 39 \$335,000-\$10,000,000 34 \$10,000,000-\$15,000,000 35

This preview has intentionally blurred sections. Sign up to view the full version.

\$15,000,000-\$18,333,333 38 Over \$18,333,333 35 Problem # 2 Meyersdale Office Supplies has common equity of \$40 million. The company’s stock price is \$80 per share and its market/book ratio is 4.0. How many shares of stock does the company have outstanding? We have to calculate the market/ Book ratio: (M/B) = ((price per share* shares) / book Value) => 4= ((80*shares)/ 40000000) , solved to shares => shares = 2000000 Problem # 3 A firm has a profit margin of 15% on sales of \$20,000,000. If the firm has debt of \$7,500,000, total assets of \$22,500,000, what is the firm’s ROA? Net income=0.15(\$20,000,000) = \$3,000,000. ROA = \$3,000,000/\$22,500,000 = 13.3%. Problem # 4 Tapley Dental Supply Company has the following data:
Net income \$240 Sales \$10,000 Total assets \$6,000 Debt ratio 75%

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern