JP Inc. had the following information expressed in millions of $: 2019 2020 Net Fixed Assets 2,000 2,500 After Tax Operating Income 700 925 Net Income 600 825 b. The growth rate of GDP is estimated to be on average 2.5% in the next few years. JP inc has a capital structure of 40% Debt and 60% Common Stock (Equity). Cost of debt prior to taxes is estimated to be 5% and cost of equity is estimated to 13%. Tax rate is estimated to be 35%. Based on this information and your solution in 18.a estimate the intrinsic value for this firm.
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- The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?Landvision Inc. had net income in 2020 for $120,000. Here are some of the extra financial ratios from the annual report Profit margin 20%, Return on Assets 35%, Debt to Asset Ratio30% Please calculate the ROE ratio O A. 70% B. 60% O C. 50% O D. 25%C Company has the following data for the year ending 12/31/2020 (dollars are in thousands): Net income = $600; EBIT = $1,184; Total assets = $3,000; Short-term investments = $200; Total capital employed = $2,193; and tax rate = 30%. The company’s WACC is 11.07%. What was its Economic Value Added (EVA) for the year 2020? Round your answer to the nearest dollar. Group of answer choices: $583 $586 $577 $572 $580
- The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement Sales Costs $ 4,550 2,050 Pretax income Taxes (at 30.0%) $ 2,500 750 Net income $ 1,750 Balance Sheet, Year-End 2022 Net assets $ 6,600 2021 $ 6,300 Total $ 6,600 $ 6,300 Debt Equity Total 2022 $ 2,800 3,800 2021 $ 2,700 3,600 $ 6,600 $ 6,300 a. Assume that the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Internal growth rate b. Sustainable growth rate % %Robbins Corporation reports the following information at December 31, 2020: Sales $15,000,000, Cash $3,000,000, Unearned Revenues $400,000, Dividends $1,000,000, Cost of Goods Sold $8,500,000. What is Robbins Corporation's Gross Margin?DEF Corporation had the following information for the year 2022: Net sales: $500,000 Gross profit margin: 40% Operating expenses: $200,000 Income tax rate: 30% Calculate the net income for the year.
- 16. In December 2020, Remal Co. had AED 200 million debt, AED 40 million in operating income, interest expense AED 4 million, AED 450 million in total assests and tax rate 35 percent. The ROA ratio is: ROA= Net Income + Interest exp Total assets.The most recent financial statements for Crosby Incorporated, follow. Sales for 2021 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets and accounts payable increase spontaneously with sales. CROSBY, INCORPORATED 2020 Income Statement Sales 749,000 584,000 20,000 Costs Other expenses Earnings before interest and taxes $ 145,000 Interest paid 16,000 $ 129,000 Taxable income Taxes (21%) 27,090 Net income $ 101,910 Dividends $ 31,592 Addition to retained earnings 70,318 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets Liabilities and Owners' Equity Current assets Current liabilities Accounts payable Notes payable $ 20,840 $ 55,000 14,200 Cash Accounts receivable 43,780 Inventory 93,960 Total $ 69,200 $ 158,580 Long-term debt $ 132,000 Total Fixed assets Owners' equity Common stock and paid-in surplus Net plant and equipment $ 425,000 $…As the chief financial officer of Adirondack Designs, you have the following information: • Next year's expected net income after tax but before new financing $42 million Sinking-fund payments due next year on the existing debt $15 million • Interest due next year on the existing debt $10 million • Common stock price, per share $28.00 • Common shares outstanding 20 million Company tax rate 30% Calculate the firm's times-interest-earned ratio for next year assuming the firm raises $50 million of new debt at an interest rate of 4 percent. 5.83 4.21 ○ 6.38 O 1.25
- As the chief financial officer of Adirondack Designs, you have the following information: Next year’s expected net income after tax but before new financing $ 51 million Sinking-fund payments due next year on the existing debt $ 26 million Interest due next year on the existing debt $ 21 million Common stock price, per share $ 33.5 Common shares outstanding 31 million Company tax rate 35% Calculate Adirondack’s times-interest-earned ratio for next year assuming the firm raises $61 million of new debt at an interest rate of 2 percent. Calculate Adirondack’s times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.0 million. Calculate next year’s earnings per share assuming Adirondack raises the $61 million of new debt. Calculate next year’s times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at $22 a share instead of raising new debt.The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INCORPORATED 2020 Income Statement Sales $ 755,000 Costs 611,000 Other expenses 25,000 Earnings before interest and taxes $ 119,000 Interest paid 10,800 Taxable income $ 108,200 Taxes (22%) 23,804 Net income $ 84,396 Dividends $ 31,840 Addition to retained earnings 52,556 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 24,440 Accounts payable $ 58,200 Accounts receivable 33,780 Notes payable 15,200 Inventory 70,700 Total $ 73,400…a firm's financial data shows the following: Equity = $8,000 Debt = $2,000 Re = 12.5% Rd = 6% Tax rate = 30% Calculate the WACC