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jek_recluse [69]

2 years ago

10

Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt. Each has $20 m

illion in invested capital, has $3 million of EBIT, and is in the 25% federal-plus-state tax bracket. Firm HL, however, has a debt-to-capital ratio of 55% and pays 12% interest on its debt, whereas LL has a 30% debt-to-capital ratio and pays only 8% interest on its debt. Neither firm uses preferred stock in its capital structure. Calculate the return on invested capital (ROIC) for each firm. Round your answers to two decimal places.

1 answer:

vodomira [7]2 years ago

8 0

Answer:

11.25%; 11.25%

Explanation:

Given that,

Invested capital of each company = $20 million

EBIT = $3 million

Federal-plus-state tax bracket = 25%

ROIC for LL:

= EBIT × (1 - Tax rate) ÷ Invested capital

= [$3 × (1 - 25%)] ÷ $20

= 0.1125 × 100

= 11.25%

ROIC for HL:

= EBIT × (1 - Tax rate) ÷ Invested capital

= [$3 × (1 - 25%)] ÷ $20

= 0.1125 × 100

= 11.25%

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You have determined that an OCF of $151,406 will result in a zero net present value for a project, which is the minimum requirem

oee [108]

Answer:

It should be accepted as the cash flow is greater than minimum

Explanation:

We should determinate if he project can generate a cashflow of 151,406 after taxes to be accepted:

market x market share = sales in units

140,000 units x 8.5% = 11,900 units

sales x contribution less fixed cost = income before taxes

11,900 x 56.11 - 387,200= 280,509

after tax 280,509 x (1 - 21%) = 221,602.11‬

project cash flow > minimum cash flow

221,602.11 > 151,406

It should be accepted as the cash flow is greater than minimum

7 0

2 years ago

Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). R

den301095 [7]

Answer:

A.Allocates costs to assembly department = $290,250

B.Allocated costs to cutting department =$274,000

C.Allocated costs to cutting department =$254,200

Explanation:

A. Calculation for the production department that is allocated the most support department costs under the direct method

Allocated costs to cutting department =

($62,000+ $126,750)

Allocated costs to cutting department=$188,750

Allocates costs to assembly department = ($248,000+$42,250)

Allocates costs to assembly department = $290,250

Based on the above calculation the production department that is allocated the most support department costs will be Assembly department because it has the highest allocated costs of the amount of $290,250

B) Calculation for the production department that is allocated the most support department costs under the sequential method

Allocated costs to cutting department = ($ 31,000+ $243,000)

Allocated costs to cutting department =$274,000

Allocates costs to assembly department = ($124,000+$81,000)

Allocates costs to assembly department = $205,000

Allocates costs to cafeteria department =$155,000

Based on the above calculation the production department that is allocated the most support department costs will be Cutting department because the department had the highest allocated costs of the amount of $274,000

C) production department is allocated the most support department costs under the reciprocal services method?

Allocated costs to cutting department = ($ 38200+ $216000) =$254200 ( most support cost allocated to Cutting department

Allocates costs to assembly department = ($152800+$72000) = $224000

8 0

2 years ago

Jupiter Satellite Corporation earned $29 million for the fiscal year ending yesterday. The firm also paid out 30 percent of its

Arturiano [62]

Answer:

11.13%

Explanation:

Calculation to determine the required rate of return on the stock

Using this formula

Required rate of return=Last EPS*Payout*(1+RoE*(1-payout rate))/Current Price+RoE*(1-payout rate)

Let plug in the formula

Required rate of return=29/2.6*30%*(1+11%*(1-30%))/105+11%*(1-30%)

Required rate of return=11.13%

Therefore the required rate of return on the stock will be 11.13%

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2 years ago

At an activity level of 8700 machine-hours in a month, Falks Corporation's total variable production engineering cost is $728,19

Jobisdone [24]

Answer:

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Explanation:

For we to be able to calculate the or solve the problem, we are to use the following method

Firstly

Variable cost per unit = $728,190 ÷ 8,700 units

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Secondly

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Fixed cost per unit = $26.10 per unit

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Total cost = Variable cost + Fixed cost

Which we have as;

Total cost = $83.70 per unit + $26.10 per unit

Total cost = $109.80 per unit

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2 years ago

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Advocard [28]

Answer: positive, negative, demographic.

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2 years ago