financial statements11

financial statements11 - The companys Market Value Added...

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Income statement Answer: b Diff: E N i . Cox Corporation recently reported an EBITDA of $22.5 million and $5.4 million of net income. The company has $6 million interest expense and the corporate tax rate is 35 percent. What was the company’s depreciation and amortization expense? a. $ 4,333,650 b. $ 8,192,308 c. $ 9,427,973 d. $11,567,981 e. $14,307,692 EVA Answer: a Diff: E ii . Scranton Shipyards has $20 million in total investor-supplied operating capital. The company’s WACC is 10 percent. The company has the following income statement: Sales $10.0 million Operating costs 6.0 million Operating income (EBIT) $ 4.0 million Interest expense 2.0 million Earnings before taxes (EBT) $ 2.0 million Taxes (40%) 0.8 million Net income $ 1.2 million What is Scranton’s EVA? a. $ 400,000 b. -$ 800,000 c. $1,200,000 d. $2,000,000 e. $4,000,000 MVA Answer: d Diff: E iii . Hayes Corporation has $300 million of common equity on its balance sheet and 6 million shares of common stock outstanding.
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Unformatted text preview: The companys Market Value Added (MVA) is $162 million. What is the companys stock price? a. $ 23 b. $ 32 c. $ 50 d. $ 77 e. $138 i . Income statement Answer: b Diff: E N EBITDA = $22,500,000; NI = $5,400,000; Int = $6,000,000; T = 35%; DA = ? EBITDA $22,500,000 DA 8,192,308 EBITDA DA = EBIT; DA = EBITDA EBIT EBIT $14,307,692 EBIT = EBT + Int = $8,307,692 + $6,000,000 Int 6,000,000 (Given) EBT $ 8,307,692 Taxes (35%) 2,907,692 NI $ 5,400,000 (Given) 65 . 000 , 400 , 5 $ ) T 1 ( 000 , 400 , 5 $ =-ii . EVA Answer: a Diff: E EVA = EBIT (1 - T) - (WACC Total investor-supplied operating capital) = $4,000,000 (1 - 0.4) - (0.1 $20,000,000) = $2,400,000 - $2,000,000 = $400,000. iii . MVA Answer: d Diff: E MVA = (Shares outstanding)(Stock Price) - Total common equity. $162,000,000 = (6,000,000)P- $300,000,000 $462,000,000 = (6,000,000)P P = $77.00....
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This note was uploaded on 08/04/2011 for the course COMM 101 taught by Professor Sy during the Spring '11 term at USC.

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financial statements11 - The companys Market Value Added...

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