2. Pinches Salt Company has the following income statement:
Sales
&
2. Pinches Salt Company has the following income statement:
Sales
$5,000,000
Variable Operating
Cost
1,000,000
Fixed Operating Cost
2,000,000
EBIT
$2,000,000
Interest
500,000
EBT
$1,500,000
Tax (at
40%)
600,000
EAT
$ 900,000
Preferred
Dividends
100,000
Earnings available for
CS
$ 800,000
Shares
Outstanding
400,000
a. Compute Pinches DOL, DFL, and DTL
b. If sales increase to $5,500,000, what is the forecast
of the EPS. You need to...
The Alexander Company reported the following income statement
for 2016:
Sales $15,000,000
Less: Operating expenses
Wages,...
The Alexander Company reported the following income statement
for 2016:
Sales $15,000,000
Less: Operating expenses
Wages, salaries, benefits $6,000,000
Raw materials 3,000,000
Depreciation 1,500,000
General, selling, and administrative expenses 1,500,000
Total operating expenses 12,000,000
Earnings before interest and taxes (EBIT) $3,000,000
Less: Interest expense 750,000
Earnings before taxes $2,250,000
Less: Income taxes 1,000,000
Earnings after taxes $1,250,000
Less: Preferred dividends 250,000
Earnings available to common stockholders $1,000,000
Earnings per share—250,000 shares outstanding $4.00
Assume that all depreciation and 75 percent...
Hewitt Software sales for the year 2006 were RM5 million. The
firm’s variable operating cost was...
Hewitt Software sales for the year 2006 were RM5 million. The
firm’s variable operating cost was 0.50 and fixed costs RM900,000.
Its marginal income tax rate is 40 percent. Currently, the firm has
RM2.4 million of long-term bank loan outstanding at an average
interest rate of 12.5 percent. The remainder of the firm’s capital
structure consists of RM60,000 preferred stock dividends.
Hewitt is forecasting a 10 percent increase in sales for next
year (2007). Furthermore, the firm is planning to...
Problem 14-12
BWP projects sales of 100000 units next year at an average price
of $50...
Problem 14-12
BWP projects sales of 100000 units next year at an average price
of $50 per unit. Variable costs are estimated at 40% of revenue,
and fixed costs will be $2.4 million. BWP has $1 million in bonds
outstanding, on which it pays 7%, and its marginal tax rate is 40%.
There are 100000 shares of stock outstanding which trade at their
book value of $30. Compute BWP's contribution, contribution margin,
net income, DOL, and EPS. Round the answers...
BWP projects sales of 100000 units next year at an average price
of $50 per unit....
BWP projects sales of 100000 units next year at an average price
of $50 per unit. Variable costs are estimated at 40% of revenue,
and fixed costs will be $2.4 million. BWP has $1 million in bonds
outstanding, on which it pays 7.5%, and its marginal tax rate is
36%. There are 100000 shares of stock outstanding which trade at
their book value of $30. Compute BWP's contribution, contribution
margin, net income, DOL, and EPS. Round the answers to two...
Maslyn Manufacturing has projected sales of $148 million next
year. Costs are expected to be $82.5...
Maslyn Manufacturing has projected sales of $148 million next
year. Costs are expected to be $82.5 million, and net investment is
expected to be $16.5 million. Each of these values is expected to
grow at 15 percent the following year, with the growth rate
declining by 2 percent per year until the growth rate reaches 7
percent, where it is expected to remain indefinitely. There are 7
million shares of stock outstanding and investors require a return
of 14 percent...
Phillips Equipment has 80,000 bonds outstanding that are selling
at par. Bonds with similar characteristics are...
Phillips Equipment has 80,000 bonds outstanding that are selling
at par. Bonds with similar characteristics are yielding 7.5
percent. The company also has 750,000 shares of 7 percent preferred
stock and 2.5 million shares of common stock outstanding. The
preferred stock sells for $65 a share. The common stock has a beta
of 1.34 and sells for $42 a share. The cost of equity is 14.06
percent. The corporate tax rate is 38 percent. What is the firm's
weighted average...
Lister Inc. is a small, publicly traded data processing company
that has $200 million in debt...
Lister Inc. is a small, publicly traded data processing company
that has $200 million in debt outstanding, in both book value and
market value terms. The book value of equity in the company is $400
million and there are 40 million shares outstanding, trading at
$20/share. The current levered beta for the company is 1.15 and the
company’s pre-tax cost of borrowing is 5%. The current risk-free
rate in US $ is 3%, the equity risk premium is 5% and...
Fincher Manufacturing has projected sales of $147 million next
year. Costs are expected to be $82...
Fincher Manufacturing has projected sales of $147 million next
year. Costs are expected to be $82 million and net investment is
expected to be $16 million. Each of these values is expected to
grow at 15 percent the following year, with the growth rate
declining by 2 percent per year until the growth rate reaches 7
percent, where it is expected to remain indefinitely. There are 6.5
million shares of stock outstanding and investors require a return
of 14 percent...