C2 P5 6 22 25 - Chapter 2 Problem 5 To find the book value...

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Unformatted text preview: Chapter 2 Problem 5 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 = $130,000 + $710,000 = $840,000 Now we can construct the book value of assets. Doing so, we get: Book value of assets Current assets $ 840,000 Fixed assets 2,800,000 Total assets $3,640,000 All of the information to calculate the market value of assets is given, so: Market value of assets Current assets $ 825,000 Fixed assets 6,200,000 Total assets $7,025,000 Problem 6 Using Table 2.3 (page 32), we can see the marginal tax schedule. The first $50,000 of income is taxed at 15 percent, the next $50,000 is taxed at 25 percent, the next $25,000 is taxed at 34 percent, and the next $175,000 is taxed at 39 percent. So, the total taxes for the company will be: percent, and the next $175,000 is taxed at 39 percent....
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C2 P5 6 22 25 - Chapter 2 Problem 5 To find the book value...

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