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1)
Corporate Bonds issued by ABC Corporation currently issued 12.1%. Municipal Bonds of equal risk currently yield 7.7%. At what tax rate would an investor be indifferent between these two bonds?

2)
BC company had a taxable income of \$508,214 from operations after all operating costs but before interest charges of \$50,673, dividends received of \$49,352, dividends paid of \$10,000, and income taxes. What is the firm's after-tax income?

Hint: first use the tax table to compute taxes before calculating the after-tax income.

3)
ABC company had a taxable income of \$581,229 from operations after all operating costs but before interest charges of \$58,390, dividends received of \$76,648, dividends paid of \$10,000, and income taxes. What is the firm's income tax liability?

Hint: use the tax table to compute taxes.

4)
ABC corporation has operating income of \$44,569. The company's depreciation expense is \$9,918. The company is all equity-financed and it faces a tax rate of 30%. What is the company's net cash flow?

5)
Culligan, Inc., has current assets of \$20,470, net fixed assets of \$134,249, current liabilities of \$19,925, and long-term debt of \$51,567. What is the shareholders' equity?

6)
ABC's EBIT is \$5 million. The depreciation expense is \$0.5 million and interest expense is \$0.5 million. The corporate tax rate is 30%. The company has 8 million in operating current assets and \$6 million operating current liabilities. It has \$5 million in net plant and equipment. The after-tax cost of capital (WACC) is 6%. Assume that the only non-cash item is depreciation. The total net operating capital last year was \$4 million.

What was the company’s free cash flow for the year?

• 6 years ago
What was the company’s free cash flow for the year
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