Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

what us the income tax (35%) for compsny a and company b ? The following are selected financial information on Firm A and Firm B.

what us the income tax (35%) for compsny a and company b ? image text in transcribed
The following are selected financial information on Firm A and Firm B. You are asked to complete the table by methodically calculating the missing information. You will assume that Cost of Goods Sold (COGS) is 60% of Sales and that the company uses a marginal tax rate of 28% B $ 4,500 $ 4,500 60% 11 Revenue COGS Gross Profit Operating Expenses EBIT Interest Expense EBT Income Tax @ 35% Net Income 1,800 (300) 1,500 1,800 (300) 1,500 12 13 14 28% 1,080 1,055 15 Earnings per share 16 Dividend per share 17 Expected Return on Equity 18 Estimated Share Price 19 20 Market value of Equity Market Value of Debt Enterprise Value 3,470 3,052 $ 500 Outstanding Debt Shares Outstanding Cost of Debt Beta Expected return on Market Dividend pay-out ratio Dividend growth Risk free Common Equity Company's debt trading@ 1,000 5% 1.30 12% 40% 2% 3% 1,000 500 7% 1.80 12% 40% 2% $ $ n/a 3% 500 110

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Derivatives And Internal Models

Authors: Hans Peter Deutsch, Mark W. Beinker

5th Edition

3030229017, 9783030229016

More Books

Students also viewed these Finance questions