Thomas Plc generated $50 million in net income during the year on book equity of $300 million. The reported net income includes the 4% interest it earned on its cash balance of $100m.The company also reported $30 million of depreciation and $40 million of capital expenditures. Its non-cash working capital increased by $10 million, and debt increased by $10 million to $310 million. The cash balance at the end of the year was $115 million. If the cost of equity is 10%, and the tax rate is 25%, estimate a. Expected growth in net income for the company.
Thomas Plc generated $50 million in net income during the year on book equity of $300 million. The reported net income includes the 4% interest it earned on its cash balance of $100m.The company also reported $30 million of depreciation and $40 million of capital expenditures. Its non-cash working capital increased by $10 million, and debt increased by $10 million to $310 million. The cash balance at the end of the year was $115 million. If the cost of equity is 10%, and the tax rate is 25%, estimate a. Expected growth in net income for the company.
Chapter2: The Domestic And International Financial Marketplace
Section2.A: Taxes
Problem 8P
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4. Thomas Plc generated $50 million in net income during the year on book equity of $300 million. The reported net income includes the 4% interest it earned on its cash balance of $100m.The company also reported $30 million of
capital increased by $10 million, and debt increased by $10 million to $310
million. The cash balance at the end of the year was $115 million. If the
equity
a. Expected growth in net income for the company.
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