Haricot Corporation and Pinto Corporation both have operating profits of $165 million. Haricot is financed solely by equity, while Pintohas issued $215 million of 6% debt. If the corporate tax rate is 21%:Required:a. How much tax does each company pay?b. What is the total payout to investors (debtholders plus shareholders) of each company?Answer is complete but not entirely correct.Complete this question by entering your answers in the tabs below.Required ARequired BHow much tax does each company pay?Note: Enter your answer in dollars not in millions.Tax AmountHaricotPinto$21 x$21 x< Required ARequired B > What is the total payout to investors (debtholders plus shareholders) of each company?Note: Enter your answers in million rounded to 2 decimal places.HaricotReturn to debtholdersReturn to shareholders$ 34,650,000.0Pinto$34,650,000.00million$$165,000,000.00× million165,000,000.00$$Total return to investorsmillion199,650,000.00199,650,000.00

Financing refers to the methodology of raising money or capital by a business using various forms…

Haricot Corporation and Pinto Corporation both have operating profits of $165 million. Haricot is financed solely by equity, while Pinto has issued $215 million of 6% debt. If the corporate tax rate is 21%: Required: a. How much tax does each company pay? b. What is the total payout to investors (debtholders plus shareholders) of each company?

Haricot Corporation and Pinto Corporation both have operating profits of $165 million. Haricot is financed solely by equity, while Pinto has issued $215 million of 6% debt. If the corporate tax rate is 21%: Required: a. How much tax does each company pay? b. What is the total payout to investors (debtholders plus shareholders) of each company?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 8QE

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