In its most recent financial statements, ABC Inc. reported $46 of net income and

Question

In its most recent financial statements, ABC Inc. reported $46 of net income and $724 of retained earnings. The previous retained earnings were $818. How much in dividends was paid to shareholders during the year?

Note: Enter your answer rounded off to two decimal points.

Question 21

Corporate Bonds issued by ABC Corporation currently issued 13.9%. Municipal Bonds of equal risk currently yield 6.3%. At what tax rate would an investor be indifferent between these two bonds?

Note: Enter your answer in percentages rounded off to two decimal points.

ABC Corporation had $92,746 of taxable income. Compute the tax liability.

Note: Enter your answer rounded off to two decimal points.

ABC's EBIT is $12 million. The depreciation expense is $0.5 million and interest expense is $0.5 million. The corporate tax rate is 30%. The company has 10 million in operating current assets and $3 million operating current liabilities. It has $12 million in net plant and equipment. The after-tax cost of capital (WACC) is 8%. Assume that the only non-cash item is depreciation. The total net operating capital last year was $15 million.

What was the company

Explanation / Answer

Ans-20

Dividend paid to shareholders during the year = 818+46-724

=140

Ans-21

tax rate would an investor be indifferent between these two bonds=6.3/13.9 * 100

=45.32%

Ans-23

FREECASHFLOW=EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure

=12*70% + 0.5

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