Solution-Poto corporations interst tax shield

Poto corporations interst tax shield

Reference no: EM13926470

1. Tomy Inc. has a 0.6 probability of a good year with operating cash flow of $50,000, and 0.4 probability of a bad year with operating cash flow of $30,000. The company has a debt of $35,000 with 8% interest due next year. Assuming the company has no means of servicing its debt other than operations, and a 0% tax rate, which of the following is True:

a) Shareholders expected claim is $12,200

b) Creditors expected claim is $37,800

c) Creditors expected claim is $34680

d) None of the above.

2. Poto corporation has a net income of $20,000 and tax rate of 35%. Its total debt is $25,000 with Principal Payments of $5000 due at the end of each year and an annual interest rate of 8%. What will be Poto Corporations's interst tax shield in the upcoming year?

a) $8,750

b) $700

c) $9,450

d) $2,450

Reference no: EM13926470

Questions Cloud

Families be responsible for related older adults : This commentary is in response to the editorial in your newspaper regarding the Crimes and Harms Committed Against the Elderly, and the lack of protection for many of them. For one thing, when should families be responsible for related older adul..

Deep recession in europe : Explain what happens to output in the short run in each of the following circumstances: a) There is deep recession in Europe. b) Housing values rise above their trend. c) Mortgage lenders raise interest rates.

Doubly infinite sequence of random variables : Let {Yt} be a doubly infinite sequence of random variables that is stationary with autocovariance function γY . Let Xt = (a + bt)st + Yt, where a and b are real numbers and st is a deterministic seasonal function with period d

Document serves to protect the right of self-determination : Legal document in which a person expresses in advance his or her wishes concerning the use of artificial life support or other medical treatments To be referred to should the person be unable to communicate such wishes at the end of life A living ..

Poto corporations interst tax shield : Poto corporation has a net income of $20,000 and tax rate of 35%. Its total debt is $25,000 with Principal Payments of $5000 due at the end of each year and an annual interest rate of 8%. What will be Poto Corporations's interst tax shield in the ..

P-value of a hypothesis test : If the P-value of a hypothesis test comparing two means was 0.25, what can you conclude? (Select all that apply):

Expected stock price one year from now just after next year : The company expects to boost the dividend at a rate of 15% for the next two years. Thereafter, the growth rate is expected to be 5%. The required return on the stock is 12%. What is the expected stock price one year from now just after next year's..

Describing the use of music in the movie : 1. In your own words, write a brief review of the film and its music, describing the use of music in the movie.

Assessment of physical ability to perform the job : The police department of Mason, IL consists of 90 full-time officers varying in ages, from 21 to 59. The tenure of the officers also varies with some being newly hired and others with 10 or more years of service to the force.

User Account

All Pages

Poto corporations interst tax shield

Reference no: EM13926470

Reference no: EM13926470

Questions Cloud

Reviews

Write a Review

English Questions & Answers

Write a profile

Education system

Write an report

Discuss the accuracy of this statement

Write an essay on the youngest billionaire

Transformational leadership in the public sector

Modal verbs or modal constructions

Write a latter to mom thanking to adopting and caring

Ways of knowing & authority in your discipline

Writing an effective business letter

Discuss the kingdom of saudi arabia

Developing an annotated bibliography

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT