(2-1) Personal After-Tax Yield (2-2) Personal After-Tax Yield (2-3) Income Statement (2-4) Income Statement (2-5) Net Cash Flow (2-6) Statement of Retained Earnings EASY PROBLEMS 1-6 An investor recently purchased a corporate bond that yields 9 %. The investor is in the 36% combined federal and state tax bracket. What is the bond's after-tax yield? Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds? Molteni Motors Inc. recently reported $6 million of net income. Its EBIT was $13 million. and its tax rate was 40%. What was its interest expense? (Hint: Write out the headings for an income statement and then fill in the known values. Then divide $6 million.net income by 1-T 0.6 to find the pre-tax income. The difference between EBIT and taxable income must be the interest expense. Use this procedure to work some of the other problems.) Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? Kendall Corners Inc. recently reported net income of $3.1 million and depreciation of $500,000. What was its net cash flow? Assume it had no amortization expense. In its most recent financial statements, Del-Castillo Inc, reported $70 million of net income and $900 million of retained earnings. The previous retained earnings were $855 million. How much in dividends did the firm pay to shareholders during the year? (2-7) Corporate Tax Liability INTERMEDIATE PROBLEMS 7-11 The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before: (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What is the firm's taxable income? What is it marginal tax rate? What is its tax expense? What is its after-tax income? What is the average tax rate based on taxable income?