A division of Hanes has the following data at the end of a year. Total revenue =

Question

A division of Hanes has the following data at the end of a year. Total revenue = $48 million Depreciation = $8.2 million Operating expenses = $28 million For an effective federal tax rate of 35% and state tax rate of 6.5%, determine the

a.)CFAT-

choices are

1.)$21.37 million

2.)$15.37 million

3.)$25.37 million

4.)$10.37 million

B.)Total Taxes

Choices are.

1.)$4.629 million

2.)$4.459 million

3.)$4.539 million

4.)$4.729 million

C.)NPAT -

choices are

1.)$6.17 million

2.)$9.17million

3.)7.17 million

4.)8.17 milliom

Explanation / Answer

Solution a:

Hence option 2 is correct.

Solution b:

Total taxes = Federal tax + State tax = $3.862 + $0.767 = $4.629 million

Hence option 1 is correct.

Solution c:

Refer table in a, Net profit after tax = $7.17 million

Hence option 3 is correct.

Computation of CFAT Particulars Amount (In Million) Total revenue $48.00 Operating expenses $28.00 Depreciation $8.20 Income before state and federal tax $11.80 State Tax (6.5%) $0.77 Income before federal tax $11.03 Federal tax (35%) $3.86 Net Income after taxes $7.17 Add: Depreciation $8.20 CFAT $15.37

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