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Depreciation and Cash Flow- Rogers Corporation has a gross profit of $880,000 and $360,000 in depreciation expenses. The Evans Corporation also has $880,000 in gross profit, with $60,000 in depreciation expenses. Selling and administrative expenses is $120,000 for each company. The tax rate is 40 percent for both companies.
A. What is the cash flow for both companies?
B. What is the difference in cash flow between the two companies?
A $2 million school-bond issue bearing interest at 15 percent payable annually and maturing in 25 years was sold at a price which a 20 percent annual rate of return to the investors. The brokerage fee for handling the sale was 0.3 percent of the tota..
Comment on the net profit margin for these companies. Consider absolute amounts and trend.- Comment on the return on assets for these companies. Consider absolute amounts and trend.
Night Hawk Co. issued 16-year bonds two years ago at a coupon rate of 9.0 percent. The bonds make semi annual payments. Required: If these bonds currently sell for 114 percent of par value, what is the YTM?
It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. It is expected that the lockbox system will red..
One company has two outstanding publicly traded bonds. The two bonds will both mature in ten years and have the same coupon rate. One of the bonds has a sinking fund; the other one does not. Which bond will have the higher yield to maturity today?
Mark Remington, the president and CEO of Earth Systems, Inc., a waste management firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Mr. Jackson’s suggestion ethical? Explain. Is it ethical to discontinue the cash dividend..
Equity financing might be obtained from various sources such as personal money, household, associates, families, venture capital or going public by issuing Initial Public offerings. Is there a limit as to just how much equity financing a firm can ..
a commodity linked bond is issued with an embedded call option. the current commodity price is 110 as is the exercise
You are given the opportunity to borrow $10,000 for 36 months at 12% ANNUAL interest with two repayment options: Pay interest only (no principal) at the end of each month with full repayment of principal (the amount borrowed) at the end of the 36 mon..
What is the YTM of an x% annual level-coupon bond whose price is equal to the principal paid at maturity?
Explain different option valuation methods. Use the different valuation methods to value a specific option. Differentiate the intrinsic and extrinsic valuations of the option and explain how they evaluate what the different extrinsic factors are tell..
Anthony, Ltd. purchased a duplicating machine for $15,000. This machine qualifies as a five-year recovery asset under MACRS. The company has a tax rate of 33%. The MACRS depreciation rates are as follows: Year 1: 20.00%, Year 2: 32.00%, Year 3: 19.20..
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