What is the difference in cash flow between the two firms

Assignment Help Financial Management

Reference no: EM13804303

The Jupiter Corporation has a gross profit of $743,000 and $276,000 in depreciation expense. The Saturn Corporation also has $743,000 in gross profit, with $47,700 in depreciation expense. Selling and administrative expense is $164,000 for each company.

a. Given that the tax rate is 40 percent, compute the cash flow for both companies.

b. What is the difference in cash flow between the two firms?

Reference no: EM13804303

Questions Cloud

What should be the current market price per share : Kennebunk Manufacturing is expected to pay a dividend of $8 per share next year. The dividend growth rate is expected to continue to be 3%. Required rate of return is 7%. What should be the current market price per share?

What is the yield to maturity of the bond today : A corporate bond has a face value of $1,000 and an annual coupon interest rate of 7%. Interest is paid annually. 10 years of the life of the bond remain. The current market price of the bond is $1232. To the nearest 1/100 0f 1 percent, what is the yi..

What is external rate of return : A proprietor is considering a new investment of $1,000, with expected returns of 150 per year for 1st 3 yr, 1150 in 4th, MARR = 8%, What is external rate of return?

Find the net present value for a project that would yield : A project proposal stated that it would provide at least $20,000 in annual returns for the next 3 years but requires an initial investment of $50,000. Will its approval be worthwhile if the cost of capital is 8%? Find the net present value for a proj..

What is the difference in cash flow between the two firms : The Jupiter Corporation has a gross profit of $743,000 and $276,000 in depreciation expense. The Saturn Corporation also has $743,000 in gross profit, with $47,700 in depreciation expense. Selling and administrative expense is $164,000 for each compa..

About qualitative and quantitative risk analysis : Apply what you have learned about qualitative and quantitative risk analysis to a scenario of your choosing Some examples would be home improvement project, changing jobs, vacation plans The purpose of this activity is to simplify the subject and as..

Order return probability : Calculate the expected return on an asset that has the following probable returns:

Minimum monthly payment of the outstanding balance : How long will it take Kate to pay for her furniture set if she chooses to pay only the minimum monthly payment of 2% of the outstanding balance? Her furniture set cost $3,750 financed at 19 3/4% annual interest.

Approximate after-tax cost of debt for a new issue of bonds : The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?

User Account

All Pages