HW38_39_40_41_42_43sol

HW38_39_40_41_42_43sol - Problem 39 A Net income Add...

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Problem 39 A. Net income $1,020,000 Add interest expense, net of taxes: 356,400 NOPAT $1,376,400 B. Assets $8,500,000 Less non-interest bearing current liabilities 712,000 Invested capital $7,788,000 C. NOPAT = $1,376,400 = Invested Capital $7,788,000 17.67% Toney Company generates about 17.67 cents of profit for each d of assets tied up in the division. D, NOPAT = $1,376,400 = 15.465168 Sales $8,900,000 15.47% E. Sales = $8,900,000 = 1.14 Invested capital $7,788,000 1.14 F. ROI = profit margin x investment turnover $1,376,400 .x $8,900,000 $8,900,000 $7,788,000 15.465169% .x 1.1427838 times = 17.67% G. Residual income = NOPAT - CC [ Invested capital ] = $1,376,400 - 9.2% ( $7,788,000) = $659,904 Toney Company has increasd the value of its parent company by $659.904. i.e., the net worth $540,000 x (1-34%)
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dollar 85% times
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Problem 40 A. Calculate invested capital. Assets $8,890,000 Less non-interest bearing current liabilities 450,000 Invested capital $8,440,000 Net income $1,020,000 Add interest expense, net of taxes:
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HW38_39_40_41_42_43sol - Problem 39 A Net income Add...

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