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3. You recently got into a debate with an accountant at your firm. As a financial analyst, you believe that market values for assets are
3. You recently got into a debate with an accountant at your firm. As a financial analyst, you believe that market values for assets are more informative and useful than book values. You wonder why anyone would waste their time thinking about historical book values. On the other hand, your accountan strongly emphasized that book values can be supported and are reliable. You're about to make a presentation to your financial manager - how will you explain which of these is more important, historical book values or market values? 4. The Dance Company paid $1,560,000 in dividends and $586,000 in interest expense. The addition to retained earnings was $850,000 and net new equity was $451,870. The tax rate is 20 percent. Sales are $7,125,000 and depreciation is $1,555,600. What are the earnings before interest and taxes? 5.A. The Andantino Corporation recently purchased a long-term asset for $12,223,500. The company's CFO expects that the asset will have a 10 year life The asset has a 20% CCA rate. At the end of year 10, it is expected that the company will be able to sell the asset for $2 million. Given this information, determine the value of the terminal loss or recapture at the end of year ten. Discussion: 5.B. Andantino's effective tax rate is 18%. How much tax will the company save in year five, due to the inclusion of CCA in the income statement
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