An enterprise with a profit before interest and tax of 150,000, a compound leverage level of 3 and a financial leverage level of 1.5; What will be the profit before interest and tax if their sales increase by 8% next year?

Q: The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume that…

A: Particulars Current($) Forecasted ($) Sales 8,000,000 12,681,481 Less: Operating costs excluding…

Q: Sisyphus Corp. has projected that their performance for the next five years results in the…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

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

A: 1) Computation of DOL, DFL, DCL is as follows:DOL=Sales -Variable costSales -variable cost-fixed…

Q: Power Development Incorporation is expecting earnings before interest and taxes of P2 million for…

A: Given that ; EBIT:$2,000,000 Less: Interest : ($5,000,000*10%) 500,000 Earning before Tax :…

Q: A company has annual after-tax operating cash flows of P2,000,000 per year which are expected to…

A: After tax cash flow = P 2,000,000 WACC = 8%

Q: Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest…

A: Earnings before interest and taxes: Earnings before interest, depreciation and taxes are the…

Q: For a firm facing a marginal income tax rate of 34%, what is the after-tax cash flow effect of: (a)…

A: Contribution = Sales - Variable Costs  Hence, the contribution increase by $1,000, hence profit…

Q: Power Development Incorporation is expecting earnings before interest and taxes of P2 million for…

A: In residual dividend theory, the dividend paid by the firm should be view as residual. The dividend…

Q: An investor is considering investing in one of two firms (C and D). The WACC is 12% and the…

A: C firm is stronger compared to firm D.

Q: A firm has total interest charges of $10,000 per year, sates of $1 million, a tax rate of 40…

A: Times interest earned ratio or interest coverage ratio shows ability of the company in paying it's…

Q: A company has annual after-tax operating cash flows of P2,000,000 per year which are expected to…

A: Annual after-tax operating cash flows (CF) = P 2,000,000 WACC = 8%

Q: Vapor Lock Motors’ EBIT is $7,000,000, the company’s interest expense is $2,000,000, and its tax…

A: DFL means how much the earnings of a firm change due to change in the debt-equity ratio of the firm.…

Q: Last year the Rondoelea Products Company had $142 million in annual sales and a net profit margin…

A: EBIT = [ (Sales x net profit margin) / (1 - tax rate) ] + (Amount of debt * Interest rate) EBIT =…

Q: It is known that a firm’s Net Operating Profit After Tax (NOPAT) is $58,000 and its Economic Value…

A: We need to use EVA equation below to calculate WACC EVA =Net Operating Profit After Tax (NOPAT)…

Q: A firm has EBIT of $7.5 million, a 33% tax rate, a weighted average cost of capital of 8.95% and…

A: EBIT = $7.5 MillionTax Rate = 33%Weighted Average Cost of Capital (WACC) = 8.95%Total Capital = $55…

Q: If sales increase from P80.000 per year to P140,000 per year, and if the operating leverage factor…

A: Calculation of Expected Percentage increase in Net Operating Income if sales increase by 75%…

Q: Al-Shamukh Constructors Ltd. currently has sales of OMR 24 million a year, with a stock level of 25…

A: Cost of stock levels = Sales × given paercentage=OMR 24 million × 25%=OMR 6 million Operating…

Q: If sales increase from R80 000 per year to R120 000 per year, and if the operating leverage is 5,…

A: Net Income is defined as the total amount of the funds, which is earned by the business in the…

Q: Power Development Incorporation is expecting earnings before interest and taxes of P2 million for…

A: Here details related with the calculation of project and its arrangement of fund for both debt and…

Q: The cost of capital is 15%, the before-tax cost of debt is 9%, and the mar-ginal income tax rate is…

A: The cost of capital is the cost of raising funds a firm has to bear. It is the weighted average cost…

Q: A company forecasts free cash flow of $400 at Year 1 and $600at Year 2; after Year 2, the FCF grow…

A: The cash generated over and above required by business operations and capital expenditure is called…

Q: A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant…

A: Firm Value: The value of a company, sometimes referred to as Firm Value (FV) or Enterprise Value…

Q: VWX Inc., has sales of $500,000, net income of $80,000, dividend payout of 50%, total assets of…

A: Sales are $500,000 Net income is $80,000. Dividend payout ratio is 50%. Total assets are $700,000…

Q: igzaw Company has Sales amounting to P400,000 with expected increase of 25% next year. Net earnings…

A: Additional funds needed(AFN), as the name itself implies, refers to the additional funds the company…

Q: Your business plan for your proposed start-up firm envisions first-year revenues of $120,000, fixed…

A: Given information in this question, Revenue                      =          $120,000  Variable cost…

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

A: formula for DOL, DFL and DCL DOL=contibutionEBIT=sales - variable costsales - variable cost - fixed…

Q: Company B is expecting a total sale to be 5 million in the first year and will increase by 10% each…

A: Total sale = 5 million Increase in sale = 10% Employees bonus = 2% of sales  Interest rate = 8%…

Q: A company has annual after-tax operating cash flows of P2,000,000 per year which are expected to…

A: Annual after tax cash inflow = P 2,000,000 Weighted average cost of capital  = 8%

Q: NUBD had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company's…

A: Given,  Degree of operating leverage = 5 Increase in sales = 15%

Q: Suppose that the market value of a company’s 5.000.000 outstanding number of shares is estimated at…

A: Weighted average cost of capital is the expected rate of return that is expected from a company to…

Q: A firm has total interest charges of $10,000 per year, sales of $1 million, a tax rate of 40…

A: Solution: The times interest earned ration is a measure to determine company's ability to meet its…

Q: You are evaluating a new product. In year 3 of your​ analysis, you are projecting pro forma sales of…

A: Solution:- i)Computation of pro forma earnings for year​ 3 as follows:- Note:- Straight line method…

Q: BN had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company’s…

A: Degree of operating leverage = % change in operating income% change in sales…

Q: The free cash flow to the firm is reported as $300 million. The interest expense to the firm is $30…

A: Information povided

Q: Sisyphus Corp. has projected that their performance for the next five years result to the following:…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Distribution Limited projects sales next year to be $4 million and expects to earn 5% of that amount…

A: Assets is the resource that generates that generates potential benefits in the future for any…

Q: A company retains 7,50,000 out of its current earnings. The expected rate of return to the…

A: Retained Earnings (RE) are the aggregate sum of a company's profits that are kept for internal…

Q: An investor has estimated that next year's sales for Pagoda Hotel will be RM100 million. Pagoda…

A: As the question has more than 3 sub-parts, the first 3 subparts are answered as per the guidelines.…

Q: Hernandez Corporation expects to have the following data during the coming year. What is Hernandez's…

A: ROE refers to return on equity. It is a measure of profitability of a firm with respect to the…

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…

Q: NUBD had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company’s…

A: Solution: Profit before taxes will increase by = Increase in sales *  degrees of operating leverage…