### Find how much tax must patriot pay on transaction

Assignment Help Corporate Finance
##### Reference no: EM1343919

The CIG Power Corporation expects to report earnings before interest and taxes of \$25 million this year. Management has determined that the firm needs \$10 million of new capital this year to fund its anticipated capital investments. One alternative is to borrow the funds from a syndicate of banks at a 15 percent rate of interest. Alternatively, CIG could sell \$10 million of a new preferred stock that pays annual dividends of \$1.4 million. The marginal tax rate for CIG is 40 percent.

a. What will be the "earnings after tax and available for common stockholders" if the money is borrowed?

b. What will be the "earnings after tax and available for common stockholders" if preferred stock is sold?

4. Patriot Industries recently sold its fin fabrication machine for \$150,000. The machine originally cost \$500,000 and has a current book value of \$100,000. Patriot's marginal tax rate is 35 percent for ordinary income and 35 percent for capital gains income.

a. What amount of gain has Patriot received from this transaction?

b. Is this a capital or ordinary gain?

c. How much tax must Patriot pay on this transaction?

### Previous Q& A

#### Hewlett packard-compaq merger

For the Hewlett Packard/Compaq merger, and in relevance to contingency plans which could have been anticipated for the strategy, As a result of your investigation and analysis

#### Calculate the adjusted present value

Suppose that a company is planning to undertake a project costing \$2,000,000. This money will be depreciated using straight line depreciation over 5 years.

#### Mergers and acquisitions failures

Compare and contrast M&A failures, such as technical and legal insolvency, and bankruptcy. Also require to consider what happens to stakeholders, company image, price per share, market share, company assets, industry position, goodwill, and service..

#### Explaining the available bandwidth as function of n

Assuming average packet size is 5 slot times, expreess the available bandwidth as a function of N?

#### Evaluate each projects net present value

Evaluate each projects net present value, internal rate of return and payback period

#### Corporate acquisitions and losses

Why do firms purchase other corporations? Do firms pay too much for the acquired corporation? Why do so many acquisitions result in shareholder losses?

#### Business operations in foreign countries

As part of its international expansion program, Acme, a United State multinational enterprise, is currently in the planning stages of establishing a Greenfield production facility overseas.

#### Prepare companys consolidated balance sheet

Evaluate the three largest assets. Be sure to look at all the assets, not just the current assets and describe whether you believe the company has invested in the appropriate types of assets for this company.

#### Southwest airlines acquisition strategy for airtran

Describe what the management rationale (motive) behind the acquisition of AirTran, whether you agree with the management or you differ with the management strategy.

#### Program to randomly select three numbers

Write a program to randomly select the numbers of 3 finalist to recieve a prize. Make sure not to pick the same number twice.

### Similar Q& A

#### Explain what is aq&qs indifference level of ebit

Explain what is AQ&Q's indifference level of EBIT and provide its current situation, might it benefit from increasing or decreasing its use of debt? Explain.

#### Inventory with shortage of stock allowance

Evaluation of EOQ - Inventory with shortage of stock allowance Should the bookstore allow shortages? Explain the basis for your answer.

#### Evaluate ten financial ratios

Calculation of financial ratios - Evaluate the following ten (10) financial ratios and provide a one sentence explanation of the analytic use of each ratio test. Show your formulas and input. Accuracy to two decimal points is sufficient.

#### Prepare journal entries for the items

Prepare a bank reconciliation - Prepare journal entries for the items that should be journalized on Randy's books.

#### Computation of return on stock using capm approach

Computation of return on stock using CAPM approach - Other things held constant, if the expected inflation rate decreases and investors also become more risk averse, the Security Market Line would shift

#### Calculation of increase in sales

Calculation of Increase in Sales, Dividend Payout ratio - Find Cranberry Corporation's addition to retained earnings with a 10% increase in sales? Assume the dividend payout ratio and profit margin remains fixed.

#### Not-for profit analysis optimal patient level

Not-for Profit Analysis optimal patient level under different plans -  Calculate these levels under plan A

#### What is the state of the overall economy

value the common stock of a public company and issue a recommendation to investors whether to buy, sell or hold the stock.

#### How much should you place in the retirement fund

How much should you place in the retirement fund each year for the next 20 years to reach your retirement goal, assuming you can earn 12% per year on your retirement fund investment? Show your formulas and input

#### Purpose a time line presenting after-tax operating cash flow

Effect of capital structure on companies value per share - purpose a time line presenting the after-tax operating cash flows

#### Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

#### Investment activities

Analyze and interpret data trends (e.g., unemployment, inflation, real GDP, interest, housing starts) over the most recent three-year period to evaluate the economy and Canada's current economic status.