Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 25%, the interest rate on the debt was 8.2%, and the firm's tax rate was 38%. The new CFO wants to see how the ROE would have been affected if the firm had used a 35% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure?
a.2.57%
b.3.14%
c.1.29%
d.2.86%
e.2.48%
In: Finance
Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's tax rate was 25%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure?
In: Finance
Roadhouse Inc. releases its financial statements in April each year. For the year ended December 31, 2022, Roadhouse had pretax accounting income of $405 million. Roadhouse also had taxable income of $427.5 million. This difference between pretax accounting income and taxable income was due to a $22.5 million dollar temporary difference which was received in December 2022 and related to unearned rent revenue that would be recognized in the following year (2023). The tax rate for 2022 is 30%.
What are the journal entries to record Roadhouse Inc. income taxes for 2022?
Now, suppose in March, after Roadhouse Inc. has recorded their financial statements, but before they have been released in April, a law is signed that will lower the tax rate to 25% for 2023. Please record (if necessary, if not say why), the entry for 2022 with this new change in tax rate.
In: Accounting
The Jones Company has just completed the third year of a? 5-year diminishing value recovery period for a piece of equipment it originally purchased for $ 297 000. The depreciation rate is
40%.
a. What is the book value of the? equipment?
b. If Jones sells the equipment today for $ 79 000and its tax rate is 30 %, what is the? after-tax cash flow from selling? it?
c. Just before it is about to sell the? equipment, Jones receives a new order. It can take the new order if it keeps the old equipment. Is there a cost to taking the order and if? so, what is? it? Explain.? (Assume the new order will consume the remainder of the? machine's useful? life.)
In: Finance
On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
In: Accounting
In: Statistics and Probability
Please assume 2020 tax year:
12. Ms. Lincoln paid $14,340 of medical expenses this year that were not reimbursed by her insurance provider. Compute the after-tax cost of these expenses assuming that
In: Accounting
On July 1, Year 1, Danzer Industries Inc. issued $1,900,000 of 10-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $1,781,610. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank.
2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank.
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.)
b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.)
3. Determine the total interest expense for Year 1. Round to the nearest dollar.
In: Accounting
Some moth species have a very short window of time for mating each year. One year the moths were breeding during a week when it was breezy and their reproductive success was very low. What is the likely cause of this low success rate?
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Male moths could not follow the pheromone trails of the females because the wind dispersed the chemicals |
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Female moths could not produce pheromones due to low water availability |
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Female moths did not produce many eggs due to lower water availability |
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Male moths grew at a slower rate and were not ready to mate when females were |
Why might workers within a population of haplodiploid eusocial insects have evolved the "willingness" to help the queen raise more offspring (i.e., sisters of the workers) rather than reproducing themselves? Assume the same male is fertilizing the queen.
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Workers are more closely related to sisters than they would be to their own daughters, and hence raise their inclusive fitness by helping raise the queen's offspring |
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Workers are incapable of reproduction and therefore are making the best of a bad situation by helping raise their sisters |
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The workers help to raise the queen's offspring because there is a good chance that she will return the favor when they become queens |
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Workers are genetically identical to each other and therefore work to pass on their collective gene pool |
In: Biology
Comparative financial statement data for Carmono Company follow:
| This Year | Last Year | ||||
| Assets | |||||
| Cash | $ | 8.50 | $ | 16.00 | |
| Accounts receivable | 54.00 | 47.00 | |||
| Inventory | 97.50 | 84.40 | |||
| Total current assets | 160.00 | 147.40 | |||
| Property, plant, and equipment | 237.00 | 198.00 | |||
| Less accumulated depreciation | 47.20 | 35.40 | |||
| Net property, plant, and equipment | 189.80 | 162.60 | |||
| Total assets | $ | 349.80 | $ | 310.00 | |
| Liabilities and Stockholders’ Equity | |||||
| Accounts payable | $ | 58.50 | $ | 48.00 | |
| Common stock | 126.00 | 97.00 | |||
| Retained earnings | 165.30 | 165.00 | |||
| Total liabilities and stockholders’ equity | $ | 349.80 | $ | 310.00 | |
For this year, the company reported net income as follows:
| Sales | $ | 950.00 |
| Cost of goods sold | 570.00 | |
| Gross margin | 380.00 | |
| Selling and administrative expenses | 360.00 | |
| Net income | $ | 20.00 |
This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.
Required:
1. Using the indirect method, prepare a statement of cash flows for this year.
2. Compute Carmono’s free cash flow for this year.
In: Accounting