$10.05 o If the firm borrows $40 of the $100 at an interest rate of 10%, what are the firm's net earnings? $7.37 No financial leverage With financial leverage Sales $200 $1,600 Expenses $185 $185 EBIT 15 15 Interest 0 $4 EBT 15 11 Taxes 4.95 3.63 Net earnings $10.05 $7.37 o What is the return on the owners' investment in each case? Why do the returns differ? Return on equity: $10.05/$100 =10.05% $7.37/$40 = 18.425% The return for b is higher due to the financial leverage use being successful. The reduction of taxes with the financial leverage resulted in a reduction in taxes from the interest expense.
Store Sensitivities Even if this store has 18.1% lower sales than the forecasted level by R&P, it can achieve the accepted NPV of prototype, besides, construction cost can increase to near $10 million and still the project can achieve the expected NPV of the P04. If the stores sales decline by 10%, the project’s NPV will decrease by almost $4 millions which provides an accepted NPV of 13,340 K$ which is still above the accepted NPV of P04. Variance to prototype The Store NPV of $17,046K is $7,326K above Prototypical Store NPV. Mainly Cost of Land ($3,675K) and sales (3,603K) followed by positive benefits from real state tax are contributing to this positive variation form P04
Nikko Corp's total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its ROE(Return on Equity)? (Points : 6) 16.87% 17.75% 18.69% 19.67% 20.66% Formula used in Return on Equity calculation is: 3. You have a chance to buy an annuity that pays $1,000 at the end of each year for three years. You could earn 5.5% on your money in other investments with equal risk.
The difference in Net income between 2011 and 2013 was $2.18B. The trend for Cash Flow from Operating Activities is as follows 2013 25.86B, 2012 17.17B, and 2011 67.73B. There was a huge dip from 2011 to 2013 the 41.87B to me that’s a ton of money to make back up. I would give Citi group a C. Due to the fact that they have less money to pay out there debts. Ford Motor Company The total amount of cash available for Ford to pay their current debts is 26.75 billion dollars in favor of assets.
According to economic experts, if fully implemented, the Bush tax cut would increase stock values immediately by 5% to 15% and would reduce the cost of capital for businesses by 10% to 30%, depending on the industry. To maximize the positive job and wealth-creating impact of the Bush tax plan, it should not be shrunk, as some in the House suggest, it should be expanded to perhaps twice the size that the White House has
FI 515 Course Project a) The net cost of the spectrometer would include the original cost of the equipment, the modification costs and the increase in working capital due to having the equipment. Therefore, the net cost would be the $70,000 base costs, plus the $15,000 in modification costs and the $4,000 in capital, which equals $89,000. b) To find the operating cash flows for the three years, we have to find the cost savings after taxes and add the tax of depreciation. To find the cost savings, we have to take the $25,000 that is expected to be saved and reduce it based on a tax of 40%, or $25,000(1-.4), which equals $15,000. The tax on depreciation requires several steps to calculate.
22 LOWE’S 2010 AnnuAL REpORt Income tax provision Our effective income tax rate was 36.9% in 2009 versus 37.4% in 2008. The decrease in the effective tax rate was primarily due to favorable state tax settlements. LOWE’S BUSINESS OUTLOOK as of february 23, 2011, the date of our fourth quarter 2010 earnings release, we expected total sales in 2011 to increase approximately 5%, which includes the 53rd week. The 53rd week was expected to increase total sales by approximately 1.6%. We expected comparable store sales to increase 1% to 2% in 2011.
ACCT 557 Quiz 2 Purchase here http://chosecourses.com/ACCT%20557/acct-557-quiz-2 Product Description 1. (TCO B) As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Co.'s sole depreciable asset, acquired in Year 1, exceeded its tax basis by $250,000 at December 31, Year 1. This difference will reverse in future years. The enacted tax rate is 30% for Year 1, and 40% for future years. Noor has no other temporary differences.
The Second Strength: The current year 2014 gross profit is $27,390 which constitutes 34.75% of sales. The steady gross profit percentage is also a strength and further supports the net sales growth. The gross profit itself increased from $25,842 to $27,390 for an increase of 6% over the two periods. This is consistent with the 5.4% net sales growth. Operating expenses further support the strength with a 1.87% decrease from fiscal 2013 to fiscal
If the NPV is negative, the IRR must also be negative. | 3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%.