Net Operating Income: $14,000 Depreciation: $4,000 Debt Service: $13,000 (interest is $12,000 of this amount) Vacancy...

Net Operating Income: $14,000
Depreciation: $4,000
Debt Service: $13,000 (interest is $12,000 of this amount)
Vacancy and Credit Loss: $7,000
Interest Expense: $12,000
Operating Expenses: $3,000
Tax rate: 28%

Assuming that the investor can use any tax shelter benefits, what are the taxes due or the taxes saved ($$$) for these annual figures? ($1,440), $560 , ($560), $1,440?

Assuming that the investor can use any tax shelter benefits, what is the cash flow after taxes? ($2,000), $1,000, ($1,440), $1,560

Expert Solution

Answer) Net operating income = 14000. Hence earning before tax (EBT) = 14000 - INTEREST exp = 2000.

Hence Tax = 28% on 2000 which is equal to $ 560 due.

Answer) Cash flow after taxes = -Profit after tax - Depreciation + Vacancy or credit loss = -2000 + 560 -4000 +7000 = 3000 - 1440 = 1560 Answer

jeff jeffy answered 2 years ago

Project A has the following cash flows: Year CF: -40,000, 8,000, 14,000, 13,000, 12,000, 11,000, and...

Project A has the following cash flows: Year CF: -40,000, 8,000, 14,000, 13,000, 12,000, 11,000, and 10,000. Project B has the following cash flows: Year CF: -20,000, 7,000, 13,000, and 12,000. Assuming that the required rate is 12%, what is the Equivalent Annual Annuity (EAA) for the two projects? Based on the EAA, which project is better?

1.The interest-coverage ratio is calculated as a) net income + taxes – interest - depreciation) ÷...

1.The interest-coverage ratio is calculated as a) net income + taxes – interest - depreciation) ÷ interest. b) (net income – taxes – interest – depreciation) ÷ interest. c) net income + taxes + interest + depreciation) ÷ interest. d) net income + interest + depreciation) ÷ interest. 2. All of the following transactions lead to temporary timing differences except a) the use of straight-line depreciation of accounting purposes. b) the recognition of dividend income for dividends received from another...

Consider the following: Net income, $285,000 Depreciation Expense $33,000 Increase in accounts receivable, $12,000 Decrease in...

Consider the following: Net income, $285,000 Depreciation Expense $33,000 Increase in accounts receivable, $12,000 Decrease in merchandise inventory, $60,000 Decrease in accounts payable, $24,000 Increase in income taxes payable, $9,000 Using the Indirect Method, the Net Cash provided by Operating Activities was: Group of answer choices $351,000 $303,000 $318,000 $270,000

Baker Industries’ net income is $21,000, its interest expense is$4,000, and its tax rate is...

Baker Industries’ net income is $21,000, its interest expense is $4,000, and its tax rate is 25%. Its notes payable equals $23,000, long-term debt equals $80,000, and common equity equals $255,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm’s ROE and ROIC? Do not round intermediate calculations. Round your answers to two decimal places.

Baker Industries’ net income is $23,000, its interest expense is $4,000, and its tax rate is...

Baker Industries’ net income is $23,000, its interest expense is $4,000, and its tax rate is 40%. Its notes payable equals $25,000, long-term debt equals $80,000, and common equity equals $260,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm’s ROE and ROIC? Do not round intermediate calculations. Round your answers to two decimal places. ROE % ROIC %

Baker Industries’ net income is $25,000, its interest expense is $4,000, and its tax rate is...

Baker Industries’ net income is $25,000, its interest expense is $4,000, and its tax rate is 45%. Its notes payable equals $25,000, long-term debt equals $80,000, and common equity equals $255,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm’s ROE and ROIC? Round your answers to two decimal places. Do not round intermediate calculations. ROE % ROIC %

Find the accumulated amount A if the principal P = $13,000 is invested at the interest...

Find the accumulated amount A if the principal P = $13,000 is invested at the interest rate of r = 8% per year for t = 8.5 years, compounded quarterly. Please round your answer to the nearest cent. A = $_________

Tax depreciation shelters a portion of annual operating income from taxation. However, the amount of cumulative...

Tax depreciation shelters a portion of annual operating income from taxation. However, the amount of cumulative tax depreciation is taxed when the property is sold. Suppose that your taxes due on sale will be $35,000 greater than if the property had not been depreciated. If the sale were to occur five years from now, determine the present value of the tax on depreciation recapture in the year of sale assuming a discount rate of 9.5%. A) $31,963 B) $22,233 C)...

"Machine A has an immediate cost of $13,000, and it will earn a net income of...

"Machine A has an immediate cost of $13,000, and it will earn a net income of $6600 per year for a total of 7 years. Machine B has an immediate cost of $24,000, and it will earn a net income of $4600 per year for a total of 28 years. Assume that Machine A can continually be replaced at the end of its useful life with an identical replacement. Neither machine has any salvage value. Enter the annual equivalent worth...

Calculate the Interest Income, Interest Expense, Net Interest Income, and Net Interest Margin for the bank...

Calculate the Interest Income, Interest Expense, Net Interest Income, and Net Interest Margin for the bank listed below. Use Total Assets for ratios (rather than earning assets). "%" denotes the interest rate earned or paid on the designated asset or liability category. Please show your work in order to receive credit. Assets Amount % Liabilities and Equity Amount % Cash 80 0.0% Non-interest deposits 100 0.0% Securities 270 5.5% NOW checking 170 2.0% Loans, net 600 7.5% MMDA 330 4.0% Fed...

Question