NEW MyLab Finance with Pearson eText -- Access Card -- for Principles of Managerial Finance
14th Edition
ISBN: 9780133543759
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 13, Problem 13.5WUE
Cobalt Industries had sales of 150,000 units at a price of $10 per unit. It faced fixed operating costs of $250,000 and variable operating costs of $5 per unit. The company is subject to a tax rate of 38% and has a weighted average cost of capital of 8.5%. Calculate Cobalt’s
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Stark Industries had sales of 150,000 units at a price of $10 per unit. It faced fixed operating costs of $250,000 and variable operating costs of $5 per unit. The company is subject to a tax rate of 38% and has a weighted average cost of capital of 8.5%. Calculate Stark Industries' net operating profits after taxes (NOPAT). Knowing that the value of the firm is calculated: NOPAT/WAAC; determine the value of Stark Industries.
Last year, Jackson Tires reported net sales of $40,000,000 and total operating costs (including depreciation) of $26,000,000. Jackson Tires has $43,500,000 of investor-supplied capital, which has an after-tax cost of 7.5%. If Jackson Tires’s tax rate is 40%, how much value did its management create or lose for the firm during the year (rounded to the nearest whole dollar)?
$22,837,500
$5,137,500
$20,737,500
$1,669,688
Local Co. has sales of $10.7 million and cost of sales of $6.4 million. Its selling, general and administrative expenses are $450,000 and its research and development is $1.4 million. It has annual depreciation charges of $1.2 million and a tax rate of 25%.
a. What is Local's gross margin?
b. What is Local's operating margin?
c. What is Local's net profit margin?
d. If Local Co. had an increase in selling expenses of $330,000, how would that affect each of its margins?
e. If Local Co.had interest expense of $770,000, how would that affect each of its margins?
a. What is Local's gross margin?
Local's gross margin is
enter your response here
%. (Round to one decimal place.)
Part 3
b. What is Local's operating margin?
Local's operating margin is
enter your response here
%.
(Round to one decimal place.)
Part 5
c. What is Local's net profit margin?
Part 6
Local's net profit margin is
enter your response here
%. (Round to two decimal places.)
d. If Local Co. had an increase in…
Chapter 13 Solutions
NEW MyLab Finance with Pearson eText -- Access Card -- for Principles of Managerial Finance
Ch. 13.1 - Prob. 1FOPCh. 13.1 - Prob. 1FOECh. 13.1 - What does the term leverage mean? How are...Ch. 13.1 - Prob. 13.2RQCh. 13.1 - What is operating leverage? What causes it? How do...Ch. 13.1 - What is financial leverage? What causes it? How do...Ch. 13.1 - What is the general relationship among operating...Ch. 13.2 - What is a firms capital structure? What ratios...Ch. 13.2 - In what ways are the capital structures of U.S....Ch. 13.2 - What is the major benefit of debt financing? How...
Ch. 13.2 - Prob. 13.9RQCh. 13.2 - Prob. 13.10RQCh. 13.2 - Prob. 13.11RQCh. 13.2 - How do the cost of debt, the cost of equity, and...Ch. 13.3 - Explain the EBIT -EPS approach to capital...Ch. 13.4 - Why do maximizing EPS and maximizing value not...Ch. 13.4 - Prob. 13.15RQCh. 13 - Prob. 1ORCh. 13 - Prob. 13.3STPCh. 13 - Canvas Reproductions has fixed operating costs of...Ch. 13 - Prob. 13.2WUECh. 13 - Prob. 13.3WUECh. 13 - Parker Investments has EBIT of 20,000, interest...Ch. 13 - Cobalt Industries had sales of 150,000 units at a...Ch. 13 - Prob. 13.5PCh. 13 - Prob. 13.24PCh. 13 - Prob. 13.25PCh. 13 - Prob. 13.26P
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