Perfection Corp earned $250 million before tax in 2022. Its combined Federal and State tax rate was 26%, and the company paid $60 million in dividends. Given a dividend tax rate of 20%, what were total taxes paid from Perfection’s earnings?
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- Perfection Corp earned $250 million before tax in 2022. Its combined Federal and State tax rate was 26%, and the company paid $60 million in dividends. Given a
dividend tax rate of 20%, what were total taxes paid from Perfection’s earnings?
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- When determining the present worth of the after-tax cash flows of an investment purchased using borrowed funds, which of the following are required? I. Principal and interest component for each loan payment II. Tax rate applied to the taxable income generated by the investment III. Depreciation deductions for the investment IV. Before-tax and loan cash flows for the investment V. MARR. a. I, III, IV, and V only b. II, III, IV, and V only c. IV and V only d. All items (I, II, III, IV, and V).EFG Corporation ("EFG") is a Canadian-controlled private corporation and has correctly calculated its net income for tax purposes to be $857,000 for the year ending December 31, 2019, as shown below: Business income $710,000 Taxable capital gains $80,000 Taxable dividends from Canadian public corporations $32,000 Taxable dividends from XYZ Inc. $5,000 Interest on five-year bonds $30,000 Net income for tax purposes $857,000 EFG owns 100% of the shares of XYZ. For the current year, XYZ claimed the small-business deduction on $80,000 of its active business income. Additional information: • EFG made charitable donations of $45,000 during the year • Net capital losses were $35,000 as of January 1, 2019 • Non-capital losses were $50,000 as of January 1, 2019 • At the end of the previous year, EFG had a balance in its non-eligible refundable dividend tax on hand (RDTOH) account of $18,000 and GRIP of $2,000. XYZ received a dividend refund of $1,917 from its non-eligible RDTOH when it paid…How much is the combined incremental tax rate (state and federal) for a company located in the state of North Carolina where the state tax rate is 0.06 (in decimal, not percent)? Express response in decimals and 3 places. Do not express an answer in percentage.
- Taxes are costs, and, therefore, changes in tax rates can affect consumer prices, project lives, and the value of existing firms. Evaluate the change in taxation on the valuation of the following project: Assumptions: Tax depreciation is straight-line over three years. Pre-tax salvage value is 25 in Year 3 and 50 if the asset is scrapped in Year 2. Tax on salvage value is 40% of the difference between salvage value and book value of the investment. The cost of capital is 20%.The table is attached Please verify that the information above yields NPV = 0. If you decide to terminate the project in Year 2, what would be the NPV of the project? Suppose that the government now changes tax depreciation to allow a 100% write-off in Year 1. How does this affect your answers to parts a and b above?Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be $300,000, operating costs to be $265,000, assets (which is equal to its total invested capital) to be $200,000, and its tax rate to be 35%. Under Plan A it would finance the firm using 25% debt and 75% common equity. The interest rate on the debt would be 8.8%, but under a contract with existing bondholders the TIE ratio would have to be maintained at or above 5.5. Under Plan B, the maximum debt that met the TIE constraint would be employed. Assuming that sales, operating costs, assets, total invested capital, the interest rate, and the tax rate would all remain constant, by how much would the ROE change in response to the change in the capital structure? Do not round your intermediate calculations.All of the following are characteristics of a valueadded tax system, except: (a) Value-added taxes are taxes on consumption (b) The end user pays value-added taxes (c) Value-added taxes are charged at each stage of product development (d ) Value-added taxes are charged only on the raw materials for product development
- The capital budget of Creative Ventures Inc. is $1,000,000. The company wants to maintain a target capital structure that is 30% debt and 70% equity. The company forecasts that its net income this year will be $800,000. If the company follows a residual dividend policy, what will be its total dividend payment?Harris International currently pays a dividend of $3.24 per share on its preferred stock that sells for $54 per share. In order to raise capital to purchase a smaller competitor, the company plans to issue 2.7 million shares of preferred stock at a 10% discount to its current price. Determine (a) the amount of funding that Harris will realize through the stock offering, and (b) the cost of equity financing.suppose your company needs $43 million to build a new assembly line. your target debt-equity ratio is .75. the flotation cost for new equity is 6 percent, but the flotation cost for debt is only 2 percent. your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small.
- Printing World thinks it may need a new colour printing press. The press will cost $540,000 but will substantially reduce annual operating costs by $216,000 a year, before tax. The press has a 30% CCA rate and will be in its own asset pool. The first CCA deduction is made in year 0. The press will operate for 4 years and then be worthless. The cost of equity for Printing World is 10%, the cost of debt is 9%, and the company’s target debt-equity ratio is 0.50. The company’s tax rate is 30%. a. What is the NPV of buying the press?.A corporation in 2018 expects a gross income of $680,000, total operating expenses of $480,000, and capital investments of $29,000. In addition the corporation is able to declare $53,000 of depreciation charges for the year. The federal income tax rate is 21%. What is the expected taxable income and total federal income taxes owed for the year 2018?Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 15 percent, and its annual fixed expenses are $245,000. The firm’s income-tax rate is 30 percent. Required:1. Calculate the firm’s break-even volume of service revenue.2. How much before-tax income must the firm earn to make an after-tax net income of $138,000?3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $138,000?4. Suppose the firm’s income-tax rate changes to 20 percent. What will happen to the break-even level of consulting service revenue? Calculate the firm’s break-even volume of service revenue. How much before-tax income must the firm earn to make an after-tax net income of $138,000? What level of revenue for consulting services must the firm generate to earn an after-tax net income of $138,000? (Do not round intermediate calculations. Round your final answers to the…