Chapter 6 Solutions for Home Tasks Fundamentals of Corporate Finance Fifth Edition, Ross, Westerfield, Jordan
Essay by Ulyana Fedorenko • February 19, 2016 • Coursework • 858 Words (4 Pages) • 1,413 Views
Essay Preview: Chapter 6 Solutions for Home Tasks Fundamentals of Corporate Finance Fifth Edition, Ross, Westerfield, Jordan
Task 3
Net income = 51 350
Cash dividends = 15 000
Addition to retained earnings = Net income – Cash dividends = 51 350 – 15 000 = 36 350
Task 4
Earnings per share = Net income/Total share outstanding = 51 350/20 000 = 2,5675
Dividends per share = Cash Dividends/Total share outstanding = 15 000/20 000 = 0,75
Task 5
Current assets = Net working Capital + Current liabilities = 600 000 + 750 000 = 1 350 000
Book value current assets = 1 350 000
Book value net fixed assets = 750 000
Book value assets = 1 350 000 + 750 000 = 2 100 000
Market value current assets = 1 500 000
Market value net fixed assets = 2 000 000
Market value assets = 1 500 000 + 2 000 000 = 3 500 000
Task 6
Tax rate = 39%
Taxable income = 145 000
Income taxes:
- 0,15 * 50 000 = 7 500
- 0,25 * (75 000 – 50 000) = 6 250
- 0,34 * (100 000 – 75 000) = 8 500
- 0,39 * (145 000 – 100 000) = 17 550
Total income tax = 1 + 2 + 3 + 4 = 39 800
Task 7
Average tax rate = Total income tax/Net income = 39 800/145 000 = 27,45%
Marginal tax rate = 39%
Task 11
Cash flow to cresitors = Interest paid - Net new borrowing = 700000-900000=-200000
Task 12
Cash flow to stockholders= Dividents paid - Net New equity raised = 300000-450000=-150000
Task 13
Відповіді з 11 і 12 разом формують cash flow from assets. OCF = Net capital spending + Change in NWC + cash flow from assets = 500000-135000-200000-150000=15000
Task 14
65 000 - 41 000 - 3 000 - 1 750 = 19 250 EBIT
19 250 - 7 000 = 12 250 Taxable income
12 250 - 4 165 = 8 085 Net income
a. OCF = 19 250 + 3 000 – 4 165 = 18 085
b. Cash Flow to Creditors = Interest – Net new borrowings = 7 000 – (– 3 000) = 10 000
c. Cash Flow to Stockholders = Dividends – Net new Equity = 3 200 – 1 415 = 1 785
d. CFA = CFC + CFS = 10 000 + 1 785 = 11 785
Net capital Spending = Increase in NFA + Depreciation = 2 500 + 3 000 = 5 500
CFA = OCF – Net capital Spending – Change in NWC
Change in NWC = OCF – Net capital Spending – CFA = 18 085 – 5 500 – 11 785 = 800
Task 16
Balance Sheet (PIECE OF SHIT!!!))) | |
Cash = 200 000 | Accounts payable = 500 000 |
Accounts receivable = 105 000 | Notes payable = 125 000 |
Inventory = 330 000 | Current liabilities = 625 000 |
Current assets = 635 000 | Long-term debt = 525 000 Total liabilities = 1 150 000 |
Tangible net fixed assets = 3 000 000 | |
Intangible net fixed assets = Patents and copyrights = 525 000 | Common stock = 260 000 |
Accumulate retained earnings = 2 750 000 | |
Total assets = 4 160 000 | Total liabilities and owners’ equity = 4 160 000 |
Common stock = Total liabilities and owners’ equity - Accumulate retained earnings - Total liabilities = 260 000
Task 17
Credit debt = 2 200
Shareholders’ equity = Max [(Total assets – Total Liabilities), 0]
- If Total Assets = 2 400; Shareholders’ equity = 200
- If Total Assets = 2 400; Shareholders’ equity = 0
Task 18
Taxable income(Growth) = 85 000
Income taxes:
- 0,15 * 50 000 = 7 500
- 0,25 * (75 000 – 50 000) = 6 250
- 0,34 * (85 000 – 75 000) = 3 400
Total income tax (Growth) = 1 + 2 + 3 = 17 150
Taxable income (Income)= 1 000 000
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