Thomas Plc generated 100 million in net income during the year and reported 30 million in...
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Thomas Plc generated 100 million in net income during the year and reported 30 million in depreciation. The company also had 50 million in capital expenditures, its non-cash working capital increased from 20 to 30 million, and its debt increased by 20 million. At the end of last year, the book value of equity of Thomas Plc was 500 million, it had debt of 500 million and cash of 200 million. If the interest rate on cash balances is 2%, the cost of debt is 5%, the cost of equity is 10%, and the tax rate is 20%, what is the a. b. Equity reinvestment rate? (2.5 marks) Expected growth in net income for the company? (2.5 marks) Thomas Plc generated 100 million in net income during the year and reported 30 million in depreciation. The company also had 50 million in capital expenditures, its non-cash working capital increased from 20 to 30 million, and its debt increased by 20 million. At the end of last year, the book value of equity of Thomas Plc was 500 million, it had debt of 500 million and cash of 200 million. If the interest rate on cash balances is 2%, the cost of debt is 5%, the cost of equity is 10%, and the tax rate is 20%, what is the a. b. Equity reinvestment rate? (2.5 marks) Expected growth in net income for the company? (2.5 marks)
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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