Question
Fill the gaps for 1999. Use 20 year Bond yield What is the present value of tax shield with respect to EACH BOND GRADE? Use
Fill the gaps for 1999.
Use 20 year Bond yield
What is the present value of tax shield with respect to EACH BOND GRADE?
Use the 5 yr CAGR for sales growth
Use the current EBIT/SALES ratio to calculate the EBIT for 1999
| 1999 Pro Forma | ||||||
|
| Actual | No Debt | AAA | AA | A | BBB |
| Bond Yield |
|
|
|
|
|
|
| Sales | 1,423.2 |
|
|
|
|
|
| EBIT | 753.3 |
|
|
|
|
|
| Interest | (2.2) |
|
|
|
|
|
| Pretax Earnings | 755.5 |
|
|
|
|
|
| Taxes @ 38% | 287.6 |
|
|
|
|
|
| Net Income | 467.9 |
|
|
|
|
|
| Interest Coverage |
|
|
|
|
|
|
| Interest Coverage Needed |
|
|
|
|
|
|
Step 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
Financial Accounting A User Perspective
Authors: Robert E. Hoskin, Maureen R. Fizzell, Donald C. Cherry
4th Canadian Edition
0470834455, 978-0470834459
