Last year, Cayman Corporation had sales of $6 million, total variable costs of $2 million, and total fixed costs of $1 million. In addition, they paid $480,000 in interest to bondholders. Cayman has a 21% marginal tax rate. If Cayman's sales increase 6%, what should be the increase in operating income?
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Last year, Cayman Corporation had sales of $6 million, total variable costs of $2 million, and total fixed costs of $1 million. In addition, they paid $480,000 in interest to bondholders. Cayman has a 21% marginal tax rate. If Cayman's sales increase 6%, what should be the increase in operating income?
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- Last year, Cayman Corporation had sales of $26 million, total variable costs of $15 million, and total fixed costs of $5,000,000. In addition, they paid $4 million in interest to bondholders. Cayman has a marginal tax rate of 21 percent. If Cayman's sales increase by 15%, what should be the increase in operating income?Last year, Cayman Corporation had sales of $7 million, total variable costs of $2 million, and total fixed costs of $1 million. In addition, they paid $480,000 in interest to bondholders. Cayman has a 21% marginal tax rate. If Cayman's sales increase 6%, what should be the increase in operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES. ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR ANSWER IS 9.4567, ENTER IT AS 9.46. 420,000Last year, Cayman Corporation had sales of $6,834,793, total variable costs of $2,832,135, and total fixed costs of $1,547,197. In addition, they paid $480,000 in interest to bondholders. Cayman has a 21% marginal tax rate. If Cayman's sales increase 7%, what should be the increase in earnings per share?
- Last year, Cayman Corporation had sales of $27 million, total variable costs of $13 million, and total fixed costs of $5,000,000. In addition, they paid $3 million in interest to bondholders. Cayman has a marginal tax rate of 21 percent. If Cayman's sales increase by 15%, what should be the increase in operating income? SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR ANSWER IS 12.7125, ENTER IT AS 12.71.Last year, Cayman Corporation had sales of $6,608,800, total variable costs of $2,695,237, and total fixed costs of $1,517,037. In addition, they paid $480,000 in interest to bondholders. Cayman has a 21% marginal tax rate. If Cayman's sales increase 10%, what should be the increase in earnings per share? SET YOUR CALCULATOR TO 4 DECIMAL PLACES. ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR ANSWER IS 9.4567, ENTER IT AS 9.46.Last year, Cayman Corporation had sales of $6,766,704, total variable costs of $2,557,445, and total fixed costs of $1,589,315. In addition, they paid $480,000 in interest to bondholders. Cayman has a 21% marginal tax rate. If Cayman's sales increase 5%, what should be the increase in earnings per share? SET YOUR CALCULATOR TO 4 DECIMAL PLACES. ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE % SIGN. FOR EXAMPLE, IF YOUR ANSWER IS 9.4567, ENTER IT AS 9.46. 2. Kiwi Airlines has fixed operating costs of $3 million, and its variable costs amount to 22 percent of sales revenue. The firm has $2 million in bonds outstanding with a coupon interest rate of 8 percent . Revenues for the firm are $10 million and the firm is in the 21 percent corporate income tax bracket . What is the firm's degree of operating leverage ? SET YOUR CALCULATOR TO 4 DECIMAL PLACES . ROUND TO 2 DECIMAL PLACES AT THE END. FOR EXAMPLE , IF YOUR ANSWER IS 9.4567 ENTER IT AS 9.46 . Please help me with them before…
- Grommit Engineering expects to have net income next year of $24.36 million and free cash flow of $22.17 million. Grommit's marginal corporate tax rate is 35%. a. If Grommit increases leverage so that its interest expense rises by $6.7 million, how will net income change? b. For the same increase in interest expense, how will free cash flow change? a. If Grommit increases leverage so that its interest expense rises by $6.7 million, how will net income change? Net income will fall to $ 4.36 million. (Round to two decimal places.) b. For the same increase in interest expense, how will free cash flow change? (Select the best choice below.) A. Free cash flow increases by the amount of the interest expense. B. Free cash flow decreases by the amount of the interest expense. C. Free cash flow is not affected by interest expense. D. None of the above.Suppose a firm's tax rate is 25%. 1. What effect would a $10.92 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices that apply.) A. $10.92 million operating expense would be immediately expensed, increasing operating expenses by $10.92 million. This would lead to a reduction in taxes of 25%×$10.92 million=$2.73 million. B. A $10.92 million operating expense would be immediately expensed, increasing operating expenses by $10.92 million. This would lead to an increase in taxes of 25%×$10.92 million=$2.73 million C. Earnings would decline by $10.92 million−$2.73 million=$8.19 million. There would be no effect on next year's earnings. D. Earnings would decline by $10.92 million−$2.73 million=$8.19 million. The same effect would be seen on next year's earnings 2. What effect would a $10.25 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.05…Suppose a firm’s tax rate is 25%. 1. What effect would a $9.26 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices thatapply.) A. A $9.26 million operating expense would be immediately expensed, increasing operating expenses by $9.26 million. This would lead to a reduction in taxes of 25%×$9.26 million=$2.32 million. B. A $9.26 million operating expense would be immediately expensed, increasing operating expenses by $9.26 million. This would lead to an increase in taxes of 25%×$9.26 million =$2.32 million. C. Earnings would decline by $9.26 million−$2.32 million=$6.94 million. The same effect would be seen on next year's earnings. D. Earnings would decline by $9.26 million−$2.32 million=$6.94 million. There would be no effect on next year's earnings. 2. What effect would a $11.75 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.35 million…
- Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%?a. What are the projected sales in Years 1 and 2?b. What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? c. What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2?d. What is the projected FCF for Year 2?PMF, Inc., can deduct interest expenses next year up to 30% of EBIT. This limit is equally likely to be $20 million, $28 million, or $36 million. Its corporate tax rate is 38%, and investors pay a 30% tax rate on income from equity and a 35% tax rate on interest income. a. What is the effective tax advantage of debt if PMF has interest expenses of $16 million this coming year? b. What is the effective tax advantage of debt for interest expenses in excess of $36 million? (Ignore carryforwards). c. What is the expected effective tax advantage of debt for interest expenses between $20 million and $28 million? (Ignore carryforwards). d. What level of interest expense provides PMF with the greatest tax benefit?Ozark Industries reported net income of $75 million in 2002. The company’s corporate tax rate was 40 percent and itsinterest expense was $25 million. The company had $500 million in sales and its cost of goods sold was $350 million.Ozark’s goal is for its net income to increase by 20 percent (to $90 million) in 2003. It forecasts that the tax rate willremain at 40 percent, interest expense will increase by 40 percent, and cost of goods sold will remain at 70 percent ofsales. What level of sales (to the closest million) will Ozark have to produce in 2003 in order to meet its goal for netincome?