A company has the following profile. Solve/respond to the the questions below. Please show your calculations for
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Question:
Net Income - $375,000
Bank Debt - $1,000,000 @ 6%
Equity - $3,000,000 @ 12%
EBITDA - $500,000
Tax Rate = 25%
1) What is the cost of debt for this company?
2) What is the company's overall capital structure (% of debt, % of equity)?
3) What is the company's leverage ratio if measured by Total Debt to EBITDA?
4) If the company made $375,000 in net income, how much would the company pay in taxes using the tax rate above?
5) If the company distributed 30% of the $375,000 net income, how much in distributions did they make?
6) Using the figures from #4 and #5, how much of the net income remained in the company for growth capital?
BONUS - How much in interest, depreciation, & amortization did the company have based on the net income and 25% tax (do not calculate interest)?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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