Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can you please show readable work, thank you! 1. (10 Percent) New Business is just being formed by 10 investors, each of whom will own
Can you please show readable work, thank you!
1. (10 Percent) New Business is just being formed by 10 investors, each of whom will own 10% of the business. The firm is expected to earn $1,500,000 before taxes each year. The corporate tax rate is 35% and the personal tax rate for the firm's investors is 24%. The firm does not need to retain any earnings, so all of its after-tax income will be paid out as dividends to its investors. The investors will have to pay personal taxes on whatever they receive. How much additional spendable income will each investor have if the business is organized as a partnership rather than as a corporation? 2. (10 percent) Wukong Inc. recently reported operating income (EBIT) of $4.75 million, depreciation of $1.40 million, and had a tax rate of 35%. The firm's expenditures on fixed assets and net operating working capital totaled $0.8 million. How much was its free cash flow, in millions? 3. (10 percent) Your firm's cost of goods sold (COGS) average $3,500,000 per month, and it keeps inventory equal to 64% of its monthly COGS on hand at all times. Using a 365 -day year, what is its inventory conversion periodStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started