A firm needs $200,000 to start and expects   Sales                                $300,000 Expenses                          $285,000 Tax rate                                   40% a. What are earnings if the owners invest the $200,000? b. If the firm borrows 40% of the $200,000 at an interest rate of 10%, what are the firm's net earnings? c. What is the return on the owners' investment in each case? Why do the returns differ?

Q: Need for External Financing  To increase production capacity by 20%, a $5 million investment is…

A: Data given: Investment = $5000,000 Debt to asset ratio = 40% Dividend payout = 25% Net income = $…

Q: A firm requires an investment of $30,000 and borrows $20,000 at 7%. If the return on equity is 16%…

A: The weighted average cost of capital (WACC) is a method of calculating a firm's cost of capital in…

Q: which one is correct please suggest? QUESTION 39 Getrag expects its sales to increase 20% next year…

A: Firm needs funds to start the new projects or expand the existing one. Requirement of the funds…

Q: An enterprise with a profit before interest and tax of 150,000, a compound leverage level of 3 and a…

A: Compound Leverage =3 Financial Leverage = 1.5 Current Profit before interest and tax =150000…

Q: A firm currently sells $500,000 annually with 3% bad debt losses. Two alternative policies are…

A: The situation is based on comparative analysis of incremental revenue and incremental costs. If an…

Q: An investor chooses to support your new venture by investing $400,000. At a tax rate of 20%, the…

A: 1.Calculation of Target Profit After tax Target Profit= 8% After tax Target Profit=400,000*8%=32000…

Q: 2) The net income is RO 25,000. Last year's sales were RO 180,000. The total assets represent half…

A: The question is to find the need of external fund to continue operation and achieve sales growth.…

Q: With a firm’s sales revenue of $500,000 and earnings before interest and tax (EBIT) $100,000 and…

A: The Times Interest Earned (TIE) ratio measures a company’s ability to meet its debt obligations…

Q: Company A carries out its sales with a net maturity of 45 days, and is considering increasing this…

A: To find the answer of the first question, we will first have to find the increase in sales. To find…

Q: 1. Tower Interiors has made the forecast of sales shown in the following table. Also given is the…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: Calculate the ROI and calculate the Economic Profit.

A: Return on investment can be calculated with the formula ROI = Net IncomeInvestment=16,000100,000=…

Q: A company is planning to invest $100,000 (before tax) in a personnel training program. The $100,000…

A: Net present value is the capital budgeting technique that is used to determine the feasibility of…

Q: A small business purchased now for P50, 000 will lose P9, 600 each year for first 4 years. An…

A: Additional investment means that amount which will be invested during the duration of the project to…

Q: Udar limited is considering a change in its credit terms from 2/10 net 30 to 3/10 net 45, change is…

A: Credit terms means the terms and conditions of an enterprise through which it sells the goods on…

Q: Your company wants to invest JD 10,000,000 in network, taking into consideration the below table:…

A: EBITDA is the earning earned before considering the interest amount and tax rate.

Q: Aruz Berhad sells its product at RM45 per unit. Fixed cost per year is RM220,000 while variable cost…

A: Part (1): Calculation of EBIT and EPS: Answer: EBIT is RM230,000 EPS is 0.46

Q: A market research firm with current sales of $750 does not expect any growth in sales for the next…

A: Here, Current sales = $750 Current expenses = $160 Expenses for next year = $240 Expenses for second…

Q: Roy Toy, a division of Fun Corp. has a net operating income of $60000 and average operating assets…

A: Residual income = net operating income - average operating assets x required rate of return = 60000…

Q: Western Lumber Company expects to have free cash flow in the coming year of $4.25m and is expected…

A: Here, Expected Free cashflow=$4,250,000 Growth rate = 4% Cost of equity = 10% Pre-tax Cost of debt =…

Q: Need for External Financing To increase production capacity by 20%, an $8 million investment is…

A: To meet the financial requirement of business, companies raise the funds from different sources.…

Q: Aruz Berhad sells its product at RM45 per unit. Fixed cost per year is RM220,000 while variable cost…

A: Part (i): Calculation of EBIT and EPS: Answer: Earnings before interest and taxes (EBIT) is…

Q: A firm with $100,000 of total capital generated $50,000 of EBIT.  The firm's tax rate is 40% and its…

A: Economic value added is the economic benefit generated from the projects which are undertaken. It is…

Q: Appliance manufacturer TopStove inc posts revenue of $192 million on costs of $144 million every…

A: Information provided: Revenue per year = $192 million Cost per year = $144 million Tax rate = 33%…

Q: (Ignore income taxes in this problem.) Your Company is considering an investment that has the…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Q: 1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported…

A: Given: Revenue = $10 million Cost = $9 million Discount rate = 8%

Q: Suppose a company has profits (NOPAT) of $150,000. ¾ of their capital is supplied by shareholders.…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The free cash flow to the firm is reported as $198 million. The interest expense to the firm is $15…

A: Free Cash Flows for Equity = Free Cash Flows of the Firm + Debt - (Interest*(1-tax)) Free Cash Flows…

Q: Meyer & Co. expects its EBIT to be $97,000 every year forever. The firm can borrow at 8 percent. The…

A: According to the rule, we will answer the first three subparts, for the remaining subparts, kindly…

Q: 10. LMB Inc. is looking to invest in new production machinery. The market value of common stock is…

A: Hence, weight of equity is 51.16%, which is determined by dividing the equity market value with the…

Q: Company will spend 4.5 million on advertising for a new product.  Ads will boost sales by 10.1…

A: Incremental earnings refers to the amount by which the earnings are expected to change due to a…

Q: For the end of this year, yearly labor cost of a company is estimated as $35000 and it will increase…

A: The given problem can be solved using NPV function in excel.

Q: A company has $20 billion of sales and $1 billion of net income. Its total assets are $10 billion.…

A: The net income of the company= $ 1,000,000,000 Tax rate=40% Total Assets = $10,000,000,000

Q: Q1 (A). An investment of $100 produces rate of return as follows In year 1: a gain of 10 percent In…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: A project currently generates sales of $18 million, variable costs equal 60% of sales, and fixed…

A: The net amount of cash and cash equivalents transported into and out of a corporation is referred to…

Q: Your company wants to invest JD 10,000,000 in network, taking into consideration the below table:…

A: Return on investment is expressed as a percentage on the investment. It is a measure of…

Q: The free cash flow for Synco, Inc. equals $100,000. The firm made fixed asset investments of…

A: Information Provided: Free cash flow = $100,000 Fixed asset investment = $50,000 Operating working…

Q: 2. An A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million,…

A: Leverages means leakage of funds. Firm have to pay fixed amount in every period due to which cash…