UNIT 1- TEXTBOOK PROBLEMS

UNIT 1- TEXTBOOK PROBLEMS

UNIT 1: TEXTBOOK PROBLEMS
CHAPTER 2: PROBLEM 1
Current Assets $6,800
Net Fixed Assets $29,400
Current Liabilities $5,400
Long-Term Debt $13,100
Shareholder Equity =
Net Working Capital =
CHAPTER 2: PROBLEM 2
Income Statement
Sales $528,600
Costs $264,400
Depreciation Expense $41,700
EBIT
Interest Expense $20,700
EBT
Taxes @ 35%
Net Income =
Cash Dividends $27,000
Addition to Retained Earnings =
Tax Rate = 35%
CHAPTER 2: PROBLEM 4
Taxable Income $328,500
Table 2.3
Taxable Income Taxable Income (cont) Tax Rate
0 50,000 15%
50,001 75,000 25%
75,001 100,000 34%
100,001 335,000 39%
335,001 10,000,000 34%
10,000,001 15,000,000 35%
15,000,001 18,333,333 38%
18,333,334 + 35%
Income Taxes =
Average Tax Rate =
Marginal Tax Rate = (Note: No formula needed. Just input the correct rate from the Tax Rate column)
CHAPTER 2: PROBLEM 5
Sales $30,700
Costs $11,100
Depreciation Expense $2,100
EBIT
Interest Expense $1,140
EBT
Taxes @ 40%
Net Income
Tax Rate 40%
Operating Cash Flow =
CHAPTER 3: PROBLEM 2
Debt/Equity Ratio 0.75
Return on Assets 8.60%
Total Equity $975,000
Equity Multiplier =
Return on Equity =
Net Income =
CHAPTER 3: PROBLEM 6
ROE 15%
Payout Ratio 25%
Retention Ratio (Note: You must calculate the retention ratio first then the sustainable growth rate)
Sustainable Growth Rate =

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