Consider 1 year of a utility company's financial results. The company pays income tax of ($ 6,000,000),

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Consider 1 year of a utility company's financial results. The company pays income tax of \(\$ 6,000,000\), where the tax rate is 40 percent. Debt is \(\$ 75,000,000\) and the interest rate on debt is 10 percent. Depreciation on a total unrecovered investment of \(\$ 150,000,000\) is 7.219 percent. Book and tax depreciation methods are the same. Total cost before income taxes is \(\$ 39,000,000\).

a. How much money is paid to interest on debt?

b. What is the depreciation charge?

c. What is the annual expense?

d. What is the amount of the return to owners?

e. What are the total revenue requirements for this year?

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Principles Of Engineering Economic Analysis

ISBN: 9781118163832

6th Edition

Authors: John A. White, Kenneth E. Case, David B. Pratt

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