The balance in the firm's cash and equivalents account is needed for operations and is not considered "excess" cash. What is Rosnan's 2013 net operating working capital (NOWC)?

The balance in the firm's cash and equivalents account is needed for operations and is not considered "excess" cash.

Using the financial statements given above, what is Rosnan's 2013 free cash flow (FCF)? Use a minus sign to indicate a negative FCF.

	2013	2012
Sales	$2,000	$1,500
Operating costs excluding depreciation	1,250	1,000
EBITDA	$750	$500
Depreciation and amortization	100	75
EBIT	$650	$425
Interest	62	45
EBT	$588	$380
Taxes (40%)	235	152
Net income	$353	$228
Dividends paid	$53	$48
Addition to retained earnings	$300	$180
Shares outstanding	130	130
Price	$25.00	$22.50
WACC	10.00%

Using the financial statements above, what is Rosnan's 2013 market value added (MVA)? Round your answer to the nearest dollar. Do not round intermediate calculations. $

Hide FeedbackShow All Feedback

Check My Work Feedback

Post Submission Feedback

Solution

Using the financial statements given earlier, what is Rosnan's 2013 economic value added (EVA)? Round your answer to the nearest cent. Do not round intermediate calculations. $

Standard deduction for married couples filing jointly: $12,200

Quantitative Problem: Jenna is a single taxpayer with no dependents so she qualifies for one personal exemption. During 2013, she earned wages of $128,000. She doesn't itemize deductions, so she will take the standard deduction and her personal exemption to calculate 2013 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $4,500. How much does Jenna owe to the IRS for taxes? Round your intermediated and final answers to the nearest cent. $

Hide FeedbackShow All Feedback

Check My Work Feedback

Post Submission Feedback

Solution

Corporate

Corporations earn most of their income from operations; however, they may also receive interest and dividend income. -Select-InterestDividendCorrect 1 of Item 2 income is taxed as ordinary income; however, -Select-interestdividendCorrect 2 of Item 2 income is taxed more favorably. 70% of -Select-interestdividendsCorrect 3 of Item 2 received is excluded from taxable income, while the remaining 30% is taxed at the ordinary tax rate. For businesses, -Select-interestdividendCorrect 4 of Item 2 payments are regarded as an expense so they are tax deductible; however, -Select-interestdividendCorrect 5 of Item 2 payments are not tax deductible. Consequently, our tax system encourages -Select-equitydebtCorrect 6 of Item 2 financing over -Select-equitydebtCorrect 7 of Item 2 financing. Depreciation expense is tax deductible, so the larger the depreciation, the -Select-lowerhigherCorrect 8 of Item 2 the taxable income, the -Select-lowerhigherCorrect 9 of Item 2 the taxes, and the -Select-lowerhigherCorrect 10 of Item 2 the firm's operating cash flow. The projected 20132 tax rate schedule for corporations is shown below.

2013 Corporate Tax Rates
If Your Taxable Income Is	You Pay This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)	Average Tax Rate at Top of Bracket
Up to $50,000	$0	15.0%	15.0%
$50,000 - $75,000	7,500	25.0	18.3
$75,000 - $100,000	13,750	34.0	22.3
$100,000 - $335,000	22,250	39.0	34.0
$335,000 - $10,000,000	113,900	34.0	34.0
$10,000,000 - $15,000,000	3,400,000	35.0	34.3
$15,000,000 - $18,333,333	5,150,000	38.0	35.0
Over $18,333,333	6,416,667	35.0	35.0

Quantitative Problem: Andrews Corporation has income from operations of $255,000. In addition, it received interest income of $25,500 and received dividend income of $31,000 from another corporation. Finally, it paid $9,100 of interest income to its bondholders and paid $42,600 of dividends to its common stockholders. Using the 2013 corporate tax schedule, what is the firms federal income tax? Round your intermediated and final answers to the nearest cent.