Question 1

Sankey, Inc., has current assets of $4,230, net fixed assets of $25,700, current liabilities of $3,500, and long-term debt of $14,400. (Do not round intermediate calculations.)

What is the value of the shareholders' equity account for this firm?

Shareholders' equity

$

How much is net working capital?

Net working capital

$

Question 2

Shelton, Inc., has sales of $392,000, costs of $180,000, depreciation expense of $45,000, interest expense of $26,000, and a tax rate of 35 percent. (Do not round intermediate calculations.)

What is the net income for the firm?

Net income

$

Suppose the company paid out $35,000 in cash dividends. What is the addition to retained earnings?

Addition to retained earnings

$

Question 3

The Stefani Co. had $278,000 in taxable income. Use the rates from Table 2.3.

Calculate the companys income taxes. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Income taxes

$

What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Average tax rate

%

What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)

Marginal tax rate

%

Question #4

Barrett, Inc., has sales of $43,000, costs of $25,100, depreciation expense of $1,500, and interest expense of $1,500.

If the tax rate is 35 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations.)

Operating cash flow

$

Question #5

Corporation Growth has $83,000 in taxable income, and Corporation Income has $8,300,000 in taxable income. Use the tax rates from Table 2.3. (Do not round intermediate calculations.)

a.	What is the tax bill for each firm?

Firms	Taxes
Corporation Growth	$
Corporation Income	$

b.	Suppose both firms have identified a new project that will increase taxable income by $12,000. How much in additional taxes will each firm pay?

Firms	Additional taxes
Corporation Growth		$
Corporation Income		$

Table 2.3

Corporate Tax Rates

Taxable Income	Tax Rate
$0 50,000	15%
50,001 75,000	25
75,001 100,000	34
100,001 335,000	39
335,00110,000,000	34
10,000,00115,000,000	35
15,000,00118,333,333	38
18,333,334+	35