Nighthawk Steel, a manufacturer of specialized tools, has $5,220,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,240,000 1,740,000 2,240,000 $5,220,000
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- Nighthawk Steel, a manufacturer of specialized tools, has $5,040,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,180,000 1,680,000 2,180,000 $5,040,000 Short-term rates are 5 percent. Long-term rates are 7.5 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,050,000. The tax rate is 25 percent. Assume the term structure of interest rates becomes inverted, with short-term rates going to 10 percent and long-term rates 5 percentage points lower than short-term rates. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings be after taxes? For an example of perfectly hedged plans. see Figure 6-8 Earning after taxesNighthawk Steel, a manufacturer of specialized tools, has $4,700,000 in assets. Temporary current assets Permanent current assets Capital assets $1,400,000 1,520,000 1,780,000 Total assets $4,700,000 Short-term rates are 10 percent. Long-term rates are 15 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,000,000. The tax rate is 20 percent. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? For an example of perfectly hedged plans, see Figure 6-8. Earnings after taxesS Nighthawk Steel, a manufacturer of specialized tools, has $4,950,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,900,000 1,545,000 1,505,000 $4,950,000 Short-term rates are 9 percent. Long-term rates are 14 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,050,000. The tax rate is 40 percent. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? Eor an example of perfectly hedged plans. see Figure 6-8. Earnings after taxes
- Nighthawk Steel, a manufacturer of specialized tools, has $4,950,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,900,000 1,545,000 1,505,000 $4,950,000 Short-term rates are 9 percent. Long-term rates are 14 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,050,000. The tax rate is 40 percent. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes bé? For an example of perfectly hedged plans, see Figure 6-8. Earnings after taxesAcer Systems, a manufacturer of gaming consoles, has $5,520,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,340,000 1,840,000 2,340,000 $5,520,000 Short-term rates are 5 percent. Long-term rates are 7.5 percent. (Note that long-term rates imply a return Earnings before interest and taxes are $1,130,000. The tax rate is 25 percent. Assume the term structure a becomes inverted, with short-term rates going to 10 percent and long-term rates 5 percentage points lowe rates. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of sh what will earnings be after taxes? For an example of perfectly hedged plans, see Figure 6-8. Earning after taxes $Colter Steel has $5,250,000 in assets. Temporary current assets. Permanent current assets Fixed assets Total assets $ 2,500,000 1,575,000. 1,175,000 $ 5,250,000 Assume short-term interest rates are 10 percent and long-term rates are 4 percentage points lower than short-term rates. Earnings before interest and taxes are $1,110,000. The tax rate is 40 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing. what will earnings after taxes be? Earnings after taxes
- Nighthawk Steel, a manufacturer of specialized tools, has $4,200,000 in assets. Temporary current assets Permanent current assets Capital assets Total assets $1,000,000 2,000,000 1,200,000 $4,200,000 Short-term rates are 4 percent. Long-term rates are 6.5 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $860,000. The tax rate is 25 percent. Assume the term structure of interest rates becomes inverted, with short-term rates going to 9 percent and long-term rates 4.5 percentage points lower than short-term rates If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings be after taxes? For an example of perfectly hedged planssee Figure 6-8. Earning after taxes $ 459,000.00 OColter Steel has $4,550,000 in assets. Temporary current assets $ 1,100,000 Permanent current assets 1,505,000 Fixed assets 1,945,000 Total assets $ 4,550,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 13 percent and long-term rates 2 percentage points lower than short-term rates. Earnings before interest and taxes are $970,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?Sherlock Homes, a manufacturer of low-cost mobile housing, has $5,150,000 in assets. Temporary current assets Permanent current assets $1,130, 000 1,760, 000 2,260, 000 Capital assets Total assets $5,150, 000 Short-term rates are 14 percent. Long-term rates are 10 percent (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $1,090,000. The tax rate is 40 percent. Assume the term structure of interest rates becomes inverted, with short-term rates going to 14 percent and long-term rates 4 percentage points lower than short-term rates. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will earnings be after taxes? Eor an example of perfectly hedged plans, see Figure 6-8 Earning after taxes $ 411240 O
- The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?Company A unlevered value is $100 million. The tax rate is 30%. The debt cost ofcapital is 3% and the asset cost of capital is 6%.i. What is company A’s value if debt/assets is raised to 25% after aleveraged recapitalization. Assume debt is permanent.Peterson Packaging Corp. has $9 billion in total assets. The company’s basic earning power (BEP) ratiois 9 percent, and its times interest earned ratio is 3.0. Peterson’s depreciation and amortizationexpense totals $1 billion. It has $0.6 billion in lease payments and $0.3 billion must go towardsprincipal payments on outstanding loans and long-term debt. What is Peterson’s EBITDA coverageratio?