+1-415-670-9189
info@expertsmind.com
Decided not to replace the depreciated equipment
Course:- Financial Management
Reference No.:- EM131016081




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

Two identical firms, A and B, have the same revenue of $10 million and equal variable and fixed costs for the current year. At the start of the year, they both owned $20,000,000 in equipment which follows a depreciation schedule of 5% per year.   Over the year A decided not to replace the depreciated equipment, while B did. They otherwise acted equivalently. Which of the following is a correct implication?

A’s interest coverage ratio over the year exceeded B’s.

B’s interest coverage ratio over the year exceeded A’s.

B paid less tax than A

B will have less cash than A at year’s end




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Which of the following provides the greatest annual interest? If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have
After reading this chapter, it isn't surprising that you're becoming an invest- ment wizard. With your newfound expertise, you purchase 100 shares of KSU Corporation for $37 p
Consider a stock, XYZ, whose current price is $100 with volatility equal to 60% per annum. XYZ does not pay dividends. The annual (not continuously compounded) risk free inter
Assume Gillette Corporation will pay an annual dividend of $0.64 one year from now. Analysts expect this dividend to grow at 12.7% per year therafter until the 6th year. Thera
Jeff wants to purchase a new automobile. The one he has selected will cost $25,000 including all fees (e.g., tax, title, and licensing). Jeff has saved $10,000 to use as a dow
The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.5. The standard deviation of monthly changes in the futures price of live
You are given the year-on-year expected return on two stocks, TechCo and RetailCo, which are 4.2% and 1.8% respectively and their corresponding annualized standard deviations
Salmon Inc. has debt with both a face and a market value of $3,000. This debt has a coupon rate of 7% and pays interest annually. The expected earnings before interest and tax