A utility is submitting their petition to their regulatory agency to justify rates for the upcoming year. Their proposal is based upon revenue requirements. The company has 45 percent of their investment financed by debt at an average interest rate of 8 percent. The book value of the assets is \(\$ 85,000,000\). Annual expenses are \(\$ 6,000,000\) and the depreciation write-off is \(\$ 7,800,000\). Fixed charges are \(\$ 18,500,000\). Both book and tax depreciation follow the same MACRS schedule, and the tax rate is 40 percent.

a. What is the taxable income?

b. What is the income tax paid?

c. What are the equity earnings (return to owners)?

d. How much money is equity financed?

e. What is the percentage return on equity to owners?

f. What is the revenue requirement for the year?

g. If revenue received exactly matches the revenue requirements, determine the after-tax cash flow for the year if none of the debt principle is paid off during the year.