Today is December 31, 2018. The following information applies to Addison Airlines:After-tax, operating income for the year 2019 is expected to be P400 million.The company's depreciation expense for the year 2019 is expected to be P80million.The company's capital expenditures for the year 2019 are expected to be P160million.No change is expected in the company's net operating working capital.The company's free cash flow is expected to grow at a constant rate of 5 percentper year.The company's cost of equity is 14 percent.The company's WACC is 10 percent.The current market value of the company's debt is P1.4 billion.The company currently has 125 million shares of stock outstanding.Using the free cash flow valuation method, what should be the company's stock pricetoday?O P25O P40O P50O P85

In order to determine the company stock price, the value of the debt is required to be deducted from…

Answered: Today is December 31, 2018. The…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 12P

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AFN EQUATION Refer to Problem 16-1 and assume that the company had 3 million in assets at the end of 2019. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in Problem 16-1?
Today is December 31, 2018. The following information applies to Addison Airlines:· After-tax, operating income for the year 2019 is expected to be P400 million.· The company’s depreciation expense for the year 2019 is expected to be P80 million.· The company’s capital expenditures for the year 2019 are expected to be P160 million.· No change is expected in the company’s net operating working capital.· The company’s free cash flow is expected to grow at a constant rate of 5 percent per year.· The company’s cost of equity is 14 percent.· The company’s WACC is 10 percent.· The current market value of the company’s debt is P1.4 billion.· The company currently has 125 million shares of stock outstanding.Using the free cash flow valuation method, what should be the company’s stock price today?
For 2019, Nirvana Industries disclosed cash revenue of $12.0 million and cash expenses of $6.0 million, depreciation on plant and equipment of $2.0million and an effective tax rate of 21%. For 2019, Nirvana Industries had capital expenditures of $1.0 million to purchase manufacturing equipment and invested $850,000 in net working capital. What were the net (total) cash flows for Nirvana Industries in 2019? Round your answer to the nearest hundredth of million $
During 2023 , Ewha Corp had sales of $650,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $540,000,$85,000, and $135,000, respectively. In addition, the company had an interest expense of $75,000 and a tax rate of 35 percent. (Ignore any tax loss carryback of carry forward provisions.) a. What is Ewha Corp's net income for 2023? b. What is its operating cash flow?
At the end of 2019, ABC has a balance in accounts receivable of $250,500. Of this amount, it is estimated that $4,500 would prove uncollectible. A reserve for tax purposes is deducted for this amount. During 2020, $7,500 of accounts receivable are written off. At the end of 2020, accounts receivable total $333,200, with $8,100 of this amount expected to be uncollectible. Required: Calculate the net impact on the business income of ABC given the above information with respect to bad debts?
During 2020, Raines Umbrella Corp. had sales of $940, 000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $680,000, $85,000, and $165,000, respectively. In addition, the company had an interest expense of $53, 000 and a tax rate of 21 percent. (Assume that interest is fully deductible.) a. What was the company's net income or net loss for 2020? (Do not round intermediate calculations. Input your answer as a positive value.) b. What was its operating cash flow? (Do not round intermediate calculations.)
Shenron, Inc. had pre-tax accounting income of P1,350,000 and a tax rate of 40% in 2020, its first year of operations. During 2020 the company had the following transactions: Received rent from Master, Co. for 2021 P48,000 Municipal bond income P60,000 Depreciation for tax purposes in excess of book depreciation P30,000 Installment sales revenue to be collected in 2021 P81,000 For 2020 what is the amount of income taxes payable for Shenron, Inc? a. P579,600 b. P452,400 c. P514,800 d. P490,800
New Life Manufacturing for year-end December 31, 2022, show an accounting profit after tax of $16,500,000 after charging the following: • Depreciation $2,500,000`• Tax for the year $500,000• Property Tax $1,000,000• Interest expense $15,000• Preference dividends of $40,000 • Legal fees $1,110,000• Insurance of $750,000• Bad debts $40,000• Foreign Travel $20,000• Repairs and Maintenance $1,500,000• General expenses $600,000 Other Information1. Property Tax of $600,000 was paid for the property on which the company’s factory is located; $300,000 for the office premises and $100,000 for the CEO’s home. 2. The insurance was paid for the factory and office premises. 3. Loss on disposal of fixed assets $350,0004. Income Tax Refund of $700,000 was included as part of the entity’s income.5. The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000.6. The company paid final ordinary dividends totaling $100,000.7. Repairs and maintenance…
During 2021, Raines Umbrella Corporation had sales of $830,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $575,000, $125,000, and $145,000, respectively. In addition, the company had an interest expense of $80,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully deductible.) Suppose the company paid out $59,000 in cash dividends. If net capital spending and net working capital were both zero, and if no new stock was issued during the year, what is the net new long-term debt?
Schwert Corp. shows the following information on its 2019 income statement: sales = $246,000; costs = $135,000; other expenses = $7,100; depreciation expense = $19,100; interest expense = $10,000; taxes = $18,876; dividends = $9,800. In addition, you’re told that the firm issued $7,900 in new equity during 2019 and redeemed $6,800 in outstanding long-term debt. Net capital spending is X. There is no change in net working capital. What is X?
The Malia Corporation had sales in 2019 of $65 million, total assets of $42 million, and total liabilities of $20 million. The interest rate on the company’s debt is 6 percent and its tax rate is 21 percent. The operating profit margin was 12 percent. What were the company’s operating profits and net income? What was the operating return on assets and return on equity? Assume that interest must be paid on all of the debt.
XYZ Company, a 'for-profit' business, had revenues of $60 million in 2019. Expenses other than depreciation totaled 55 percent of revenues, and depreciation expense was $5.0 million. XYZ Company, must pay taxes at a rate of 25 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $5 million; however, now the company has decided to be more conservative in its depreciation of its capital assets. XYZ now has $2.5 million in depreciation expense instead of $5 million. Based on this change in depreciation expense, what would XYZ's total profit margin Please don't provide solutions in image

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