Colter Steel has $5,100,000 in assets. Temporary current assets $ 2,200,000 Permanent current assets 1,560,000 Fixed assets 1,340,000 Total assets $5,100,000 Short-term rates are 12 percent. Long-term rates are 17 percent. Earnings before interest and taxes are $1,080,000. The tax rate is 40 percent. f long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? Earnings after taxes
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![Problem 6-12 Matching asset mix and financing plans (LO6-3]
Colter Steel has $5,100,000 in assets.
$ 2,200,000
Temporary current assets
Permanent current assets
1,560,000
1,340,000
$ 5,100,000
Fixed assets
Total assets
Short-term rates are 12 percent. Long-term rates are 17 percent. Earnings before interest and taxes are $1,080,000. The tax rate is 40
percent.
If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing,
what will earnings after taxes be?
Earnings after taxes](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7b07311e-f579-4ac8-b710-7e0c1ec8bc92%2F2ff8c55c-b69a-40de-b4c2-9df16aad8131%2Fpb24x2m_processed.png&w=3840&q=75)
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- Accounting Problem 10-10 (Algo) Interest capitalization; weighted-average method [LO10- 7] On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,230,000 March 1, 2021 720,000 June 30, 2021 380,000 October 1, 2021 670,000 January 31, 2022 990,000 April 30, 2022 1,305,000 August 31, 2022 2,340,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,600,000 and $7,600,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of…es Problem 10-10 (Algo) Interest capitalization; weighted-average method [LO10-7] On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 $1,110,000 930,000 250,000 710,000 765,000 Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. Req 1 and 3 1,080,000 1,890,000 On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two…Problem 6-15 Alternative financing plans (LO6-5) Lear Inc. has $1,030,000 in current assets, $465,000 of which are considered permanent current assets. In addition, the firm has $830,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 9 percent. The balance will be financed with short-term financing, which currently costs 6 percent. Lear's earnings before interest and taxes are $430,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 40 percent. Earnings after taxes b. As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing and the balance with short-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $430,000. What will be Lear's earnings after taxes? The tax rate is 40 percent. Earnings after taxes
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- W Screenshot (126).png Chapter 26 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 2 3 4 1 64°F Internal rate of return method The internal rate of return method is used by Royston Construction Co. in analyzing a capital expenditure proposal that involves an investment of $17,946 and annual net cash flows of $6,000 for each of the 5 years of its useful life. 5 6 7 8 9 10 0.943 65°F Windy eBook 0.909 1.736 2.487 3.170 3.791 4.355 0.893 1.690 2.402 3.037 3.605 4.111 3.785 4.868 4.564 4.160 4.968 4.487 4.772 5.019 5.328 5.650 1.833 2.673 3.465 4.212 4.917 5.582 5.335 6.210 6.802 5.759 6.145 7.360 a. Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return. If required, round your answer to three decimal places. 0.870 1.626 2.283 2.855 ▬ ▬▬ ■ 3.353 0.833 1.528 2.106 Q Search 2 2.589 b. Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the…Pergunta 11 Use the information for the question(s) below. Omicron Industries Market Value Balance Sheet (5 Millions) and Cost of Capital Assets Cash Other Assets 0 500 x Liabilities $50.00 million $67.25 million $38.50 million $10.25 million $75.50 million Debt 200 Equity 300 Omicron Industries New Project Free Cash Flows (Millions) 0 3 40 Year Free Cash Flows (100) The debt capacity for Omicron's new project in year O is closest to: 2 50 Cost of Capital ▷ Exibir comentários da pergunta 11 TC 60 Det 6% Equity 12%ements What is the total Wealth Accumulation of the following investment assuming the available after tax reinvestment rate is 5%? IRR 10.70% O $4,690,000 O $4,821,078 O $4,848,844 $4,905.989 n 0 $ 1 S 2 $ 3 $ AS 5 $ Investment $ (3,000,000) 240,000 250,000 260,000 266,000 3,674,000
- A CasIT TIOW Duuge [vl section refers to inflows and outflows from the purchase/sale of non-current assets. The [z] section includes inflows and Butiows ITU STIUIT UI TOng lem borro Question 7 Annual Operating Loan Quarter 1 Quarter 2 Beginning Cash Balance 3,000 [5] + Net Cash Flow -13,530 + Operating Loan Borrowing [1] Operating Loan Payment [2] = Ending Cash Balance [3] 2,500 Beginning Operating Loan Balance 25,000 Ending Operating Loan Balance [4] Required Minimum Account Balance: $2,500 Do not include commas or dollar signs here to search End F10 PrtScn DII Home F9 F2 F3 F4 F5 F6 F7 F8 &A4 9a We find the following information on NPNG (No-Pain-No-Gain) Inc.: A4 9a EBIT = $2,000,000Depreciation = $250,000Change in net working capital = $100,000Net capital spending = $300,000 These numbers are projected to increase at the following supernormal rates for the next three years, and 5% after the third year for the foreseeable future: EBIT: 20%Depreciation: 10%Change in net working capital: 15%Net capital spending: 10% The firm’s tax rate is 35%, and it has 1,000,000 outstanding shares and $8,000,000 in debt. We have estimated the WACC to be 15%. a. Calculate the EBIT, Depreciation, Changes in NWC, and net capital spending for the next four years.Use the information for the question(s) below. Omicron Industries' Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Cash Other Assets 0 500 Liabilities Debt Equity 200 300 Omicron Industries' New Project Free Cash Flows (Millions) Year 0 1 2 3 Free Cash Flows ($100) $40 $50 $60 Cost of Capital Debt Equity TC 6% 12% 21%
