Question: A firm has earnings of 12 000 before interest depreciation and
A firm has earnings of $12,000 before interest, depreciation, and taxes. A new piece of equipment is installed at a cost of $10,000. The equipment will be depreciated over five years, and the firm pays 25 percent of its earnings in taxes. What are the earnings and cash flows for the firm in years 2 and 5, using the two methods of depreciation discussed in the chapter? What is the source of the difference in earnings and cash flow?
Answer to relevant QuestionsGiven the following information, compute the current and quick ratios: Cash............ $100,000 Accounts receivable..... 357,000 Inventory............ 458,000 Current liabilities....... 498,000 Long-term ...Two firms have sales of $1 million each. Other financial information is as follows: What are the operating profit margins and the net profit margins for these two firms? What are their returns on assets and on equity? Why ...Jackson Enterprises has the following capital (equity) accounts: Common stock ($1 par; 100,000 shares outstanding) ... $100,000 Additional paid-in capital............. 200,000 Retained earnings................ 225,000 The ...Jersey Jewel Mining has a beta coefficient of 1.2. Currently the risk-free rate is 5 percent and the anticipated return on the market is 11 percent. JJM pays a $4.50 dividend that is growing at 6 percent annually. a. What ...Charlotte's Clothing issued a 5 percent bond with a maturity date of 15 years. Five Years have passed and the bond is selling for $690. a. What is the current yield? b. What is the yield to maturity? c. If five years later ...
Post your question