Q2

Use the following information to answer the questions below Consider the following income statement for ABC Inc. (all figures in $ Million) 2006 60,553 45,565 11,688 1265 2035 2005 56,434 42,140 12,191 1256 847 2004 53,791 39,637 11,575 1209 1370 Total Sales Cost of goods sold Selling, general & admin expenses Depreciation Operating Income Other Income EBIT Interest expense Earnings before tax Taxes (35%) Net Income 0 0 0 847 1370 2035 510 557 1525 290 604 766 268 498 534 991 102 189 (a) (2 marks) What is the interest tax shield for ABC Inc. in 2006, 2005 and 2004? (b) (2 marks) What is the total amount available to payout to all the investors in ABC Inc for 2006, 2005 and 2004? (c) (2 marks) What is the total amount available to payout to shareholders in ABC Inc if there were no leverage for 2006, 2005 and 2004