UNIT 1: TEXTBOOK PROBLEMS 


CHAPTER 2: PROBLEM 1 

Current Assets 
$6,800 
Net Fixed Assets 
$29,400 
Current Liabilities 
$5,400 
LongTerm 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 = 