Show the effect of the price

Assignment Help Taxation
Reference no: EM13324228

1. Chip's Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 93 percent as high if the price is raised 10 percent. Chip's variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm's FCF for the year?

2. Capital Co. has a capital structure, based on current market values, that consists of 26 percent debt, 19 percent preferred stock, and 55 percent common stock. If the returns required by investors are 11 percent, 12 percent, and 14 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent.

Reference no: EM13324228

Questions Cloud

Explain how many grams of the products are produced : In an acidic solution of HCl. The products are H20, CO2, the Mn (II) ion, and potasium and chloride ions that do not take part in the reaction. A. How many grams of the products are produced by the oxidation of C6H14O3 B. Balance the equation in b..
Calculate energy needed to bring the soil to surface level : We are digging a hole to build a building. Calculate the energy needed to bring the soil to surface level. Remember the sides of the excavation lie at 45 degrees. Else, the whole would be constantly refilling itself.
What is geometric return over this period : Your grandfather invested $1,000 in a stock 27 years ago. Currently the value of his account is $226,000. What is his geometric return over this period?
How far could she long jump on the moon : Neglect air resistance and muscle atrophy and assume the same upward normal reaction force as on earth: how far could she long jump on the moon
Show the effect of the price : What will be the effect of the price increase on the firm's FCF for the year and what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent.
Explain the concentrations of the solute in solvent : When an aqueous solution of an organic compound is shaken with an immiscible organic solvent, such as diethyl ether, the solute distributes itself between the two phases. When the two phases separate into two distinct layers, an equilibrium will h..
What is the hpy on investment : What rate of return do you expect to earn on your investment and what is the HPY on your investment
What is the angle between these two vectors : Vectors A and B have scalar product -3.00 and their vector product has magnitude 5.00. What is the angle between these two vectors
What is the yield to maturity of bond : A Japanese company has a bond outstanding that sells for 94 percent of its ?100,000 par value. The bond has a coupon rate of 5.30 percent paid annually and matures in 15 years. What is the yield to maturity of this bond?

Reviews

Write a Review

Taxation Questions & Answers

  Compute kit inc''s general rate income pool

Compute Kit Inc.'s general rate income pool (GRIP) account balance as of December 31, 2011.

  Prepare a written opinion addressed to your client

Prepare a written opinion addressed to your client, Water-Jet Ferries - WaterJet has requested your company to provide them with an opinion as to the correctness of this claim by the engine manufacturer. Your opinion must be supported by reference ..

  What is the abc partnerships required tax year

What is the ABC Partnerships required tax year and Do the allocations have Substantial Economic Effect?

  Advise alpha of the income tax

All depreciable assets are for 100% business use and Alpha uses a low-value pool for all eligible assets. The closing value of the low-value pool at 30 June 2013 was $5,300. Alpha purchased a printer on S June 2014 for $700.

  Financial statements of campbell soup company

Find how much cash does Campbell soup collect from customers during year 10 and how much is paid in Cash dividends on common stock in Year 11?

  Evaluate the taxable income

Which of the subsequent statements about Ginger's hobby activity is/are correct?

  Identify the issues raised and the relevant legislation

Identify the issues raised and the relevant legislation in the context of ITAA97 and identify any cases and other sources of information relevant to the issues and legislation.

  Ethical standards for corporations

Ethical standards for corporations and recent changes to financial and reporting laws to take into account ethical standards as a result of the earlier corporate scandals

  Are burial expenses deductible

Estimates can be entered in the entry screen for Line 63 of Form 1040. Refer to #6 above for Sheri's federal withholding.

  Ward''s individual tax return may report

Ward owns 50 percent of Teal Company- Ward's individual tax return may report:

  What amount can edwina apply as credit against her 2011

Edwina worked at three jobs during 2011. She earned 30,000, 40,000 and 9,000 respectively form the jobs and had 10,000 from self-employment income. What amount can Edwina apply as credit against her 2011 income tax liability for overpayment of F..

  Prepare a partial income statement presentation

Prepare a partial income statement presentation for the income before tax, provision for income tax, and net income for 20X7.  (The best example for this is page four of a corporate income tax return-schedule M-1.)

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd