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Financial Statements, Cash Flow, and Taxes6

# Financial Statements, Cash Flow, and Taxes6 - firms tax...

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Old Exam Questions - Financial Statements, Cash Flow, and Taxes Page 29 of 44 Pages firm’s tax rate is 40 percent. Given this data, determine the net present value of this project. Year OCF NOWC GFA FCF 0 \$0 -\$4,000 -\$6,000 -\$10,000 1 \$1,200 \$0 \$0 \$1,200 2 \$1,200 \$0 \$0 \$1,200 3 \$1,200 \$0 \$0 \$1,200 \$1,200 \$0 \$0 \$1,200 \$1,200 \$0 \$0 \$1,200 \$1,200 \$0 \$0 \$1,200 A. \$3,000 B. \$6,000 C. \$4,000 D. \$7,000 E. \$5,000 YOU ARE GIVEN THE FOLLOWING INFORMATION FOR QUESTIONS 43 - 44:

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Old Exam Questions - Financial Statements, Cash Flow, and Taxes Page 30 of 44 Pages Income Statement (In Thousands) Year: 2005 Year: 2004 Sales \$18,000.00 \$15,000.00 Operating costs (excluding depreciation and amortization) \$14,400.00 \$12,000.00 EBITDA \$3,600.00 \$3,000.00 Depreciation and amortization \$900.00 \$750.00 Earnings before interest and taxes \$2,700.00 \$2,250.00 Interest \$540.00 \$250.00 Earnings before taxes \$2,160.00 \$2,000.00 Taxes (35%) \$756.00 \$700.00 Net income available to common stockholders \$1,404.00 \$1,300.00 Common dividends \$340.20 \$315.00 Balance Sheet (In Thousands) Year: 2005 Year: 2004 Assets: Cash and marketable securities \$1,800.00 \$1,500.00 Accounts receivable \$5,400.00 \$4,500.00 Inventories \$7,200.00 \$6,000.00 Total current assets \$14,400.00 \$12,000.00 Net plant and equipment \$9,000.00 \$7,500.00 Total assets \$23,400.00 \$19,500.00 Liabilities and equity: Accounts payable \$3,976.00 \$3,500.00 Notes payable \$2,000.00 \$1,000.00 Accruals \$2,860.20 \$2,500.00 Total current liabilities \$8,836.20 \$7,000.00 Long-term bonds \$2,500.00 \$1,500.00 Total debt \$11,336.20 \$8,500.00 Common stock (50 million shares) \$10,000.00 \$10,000.00 Retained earnings \$2,063.80 \$1,000.00 Total common equity \$12,063.80
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Financial Statements, Cash Flow, and Taxes6 - firms tax...

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