Using DFC method company ABC earned pretax operating income of $750,000. Income has grown 2% annually...
Using DFC method company ABC earned pretax operating income of $750,000. Income has grown 2% annually during the last 5 years, and is expected to continue growing at that rate for the next 2 years. Net operating working capital increased by $60,000 during the current year and current year capital spending on long-lived assets exceeded depreciation by $75,000. working capital and the excess of capital spending over depreciation are projected to grow at the same rate as operating income. Subsequent to the second year, you believe the pretax operating income growth rate will increase to 3% per year and remain at that level into the future. The 10-year Treasury bond rate is 2.5%, the equity risk premium is 5.5%, and the marginal federal, state, and local tax rate is 35%. Abc's beta and its target debt-to-equity ratio are 1.74 and 0.67, respectively. Its pretax cost of borrowing, based on its recent borrowing activities, is 9%. Calculate the cost of equity and ABC'S target capital structure weights
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Using DFC method company ABC earned pretax operating income of
$750,000. Income has grown 2% annually...
You are valuing a bed-and-breakfast in Vermont with the following informa- tion: ■ The business had pretax operating inc...
You are valuing a bed-and-breakfast in Vermont with the following informa- tion: ■ The business had pretax operating income of $100,000 in the most recent year. This income has grown 5% a year for the past three years, and is ex- pected to continue growing at that rate for the foreseeable future. ■ About 40% of this operating income can be attributed to the fact that the owner is a master chef. He does not plan to stay on if...
Swordfish Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for...
Swordfish Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties increased by $25,000. In addition, book depreciation exceeded tax depreciation by $100,000. In prior years, tax depreciation exceeded book depreciation by a cumulative amount of $500,000. Finally, Swordfish subtracted a dividends received deduction of $15,000 in computing its current-year taxable income. Swordfish's deferred income tax expense or benefit would be: $23,100 net deferred tax benefit. $26,250 net deferred tax benefit. $26,250 net deferred...
Angel Corporation reported pretax book income of $1,018,000. During the current year, the net reserve for...
Angel Corporation reported pretax book income of $1,018,000. During the current year, the net reserve for warranties increased by $27,700. In addition, tax depreciation exceeded book depreciation by $104,500. Finally, Angel subtracted a dividends received deduction of $28,600 in computing its current year taxable income. Using a tax rate of 34%, Angel's hypothetical tax expense in its reconciliation of its income tax expense is:
Green Corporation reported pretax book income of $1,026,000. During the current year, the net reserve for...
Green Corporation reported pretax book income of $1,026,000. During the current year, the net reserve for warranties increased by $51,300. In addition, tax depreciation exceeded book depreciation by $106,500. Finally, Green subtracted a dividends received deduction of $25,650 in computing its current year taxable income. Green's cash tax rate is: 21%. 20.48%. 19.95%. 19.34%.
Green Corporation reported pretax book income of $1,014,000. During the current year, the net reserve for...
Green Corporation reported pretax book income of $1,014,000. During the current year, the net reserve for warranties increased by $50,700. In addition, tax depreciation exceeded book depreciation by $103,500. Finally, Green subtracted a dividends received deduction of $25,350 in computing its current-year taxable income. Green's cash tax rate is: Multiple Choice 21.00 percent 20.48 percent 19.95 percent 19.38 percent
Cass Corporation reported pretax book income of $10,740,000. During the current year, the reserve...
Cass Corporation reported pretax book income of $10,740,000.
During the current year, the reserve for bad debts increased by
$247,500. In addition, tax depreciation exceeded book depreciation
by $290,000. Cass Corporation sold a fixed asset and reported book
gain of $110,000 and tax gain of $143,500. Finally, the company
received $329,000 of tax-exempt life insurance proceeds from the
death of one of its officers. Compute the company’s current income
tax expense or benefit. (Round your final answers to
nearest whole...
Cass Corporation reported pretax book income of $10,000,000. During the current year, the reserve for bad...
Cass Corporation reported pretax book income of $10,000,000. During the current year, the reserve for bad debts increased by $100,000. In addition, tax depreciation exceeded book depreciation by $200,000. Cass Corporation sold a fixed asset and reported book gain of $50,000 and tax gain of $75,000. Finally, the company received $250,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company's current income tax expense or benefit. (Amounts to be deducted should be indicated...
Cass Corporation reported pretax book income of $7,200,000. During the current year, the reserve for bad...
Cass Corporation reported pretax book income of $7,200,000. During the current year, the reserve for bad debts increased by $195,000. In addition, tax depreciation exceeded book depreciation by $445,000. Cass Corporation sold a fixed asset and reported book gain of $112,500 and tax gain of $154,500. Finally, the company received $297,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company's current income tax expense or benefit. (Round your final answers to nearest whole...
Sage Corporation began operations in 2017 and reported pretax financial income of $230,000 for the year....
Sage Corporation began operations in 2017 and reported pretax
financial income of $230,000 for the year. Sage’s tax depreciation
exceeded its book depreciation by $40,000. Sage’s tax rate for 2017
and years thereafter is 30%. Assume this is the only difference
between Sage’s pretax financial income and taxable income.
Prepare the journal entry to record the income tax expense,
deferred income taxes, and income taxes payable.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually....
Problem 2: ABC, Inc. reported pretax financial income of $80,000 for its first year of operations....
Problem 2: ABC, Inc. reported pretax financial income of $80,000 for its first year of operations. The tax rate for the current and future years is 25%. The following items caused financial income and taxable income to differ: A. Depreciation on the tax return is greater than the depreciation on the income statement by $10,000. B. Rent collected on the tax return is greater than rent recognized on the income statement by $18,000. C. Interest of $15,000 was collected on...
Green Corporation reported pretax book income of $1,014,000. During the current year, the net reserve for warranties increased by $50,700. In addition, tax depreciation exceeded book depreciation by $103,500. Finally, Green subtracted a dividends received deduction of $25,350 in computing its current-year taxable income. Green's cash tax rate is: Multiple Choice 21.00 percent 20.48 percent 19.95 percent 19.38 percent
Cass Corporation reported pretax book income of $10,740,000.
During the current year, the reserve for bad debts increased by
$247,500. In addition, tax depreciation exceeded book depreciation
by $290,000. Cass Corporation sold a fixed asset and reported book
gain of $110,000 and tax gain of $143,500. Finally, the company
received $329,000 of tax-exempt life insurance proceeds from the
death of one of its officers. Compute the company’s current income
tax expense or benefit. (Round your final answers to
nearest whole...
Cass Corporation reported pretax book income of $10,000,000. During the current year, the reserve for bad debts increased by $100,000. In addition, tax depreciation exceeded book depreciation by $200,000. Cass Corporation sold a fixed asset and reported book gain of $50,000 and tax gain of $75,000. Finally, the company received $250,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company's current income tax expense or benefit. (Amounts to be deducted should be indicated...
Cass Corporation reported pretax book income of $7,200,000. During the current year, the reserve for bad debts increased by $195,000. In addition, tax depreciation exceeded book depreciation by $445,000. Cass Corporation sold a fixed asset and reported book gain of $112,500 and tax gain of $154,500. Finally, the company received $297,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company's current income tax expense or benefit. (Round your final answers to nearest whole...
Sage Corporation began operations in 2017 and reported pretax
financial income of $230,000 for the year. Sage’s tax depreciation
exceeded its book depreciation by $40,000. Sage’s tax rate for 2017
and years thereafter is 30%. Assume this is the only difference
between Sage’s pretax financial income and taxable income.
Prepare the journal entry to record the income tax expense,
deferred income taxes, and income taxes payable.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually....
Problem 2: ABC, Inc. reported pretax financial income of $80,000 for its first year of operations. The tax rate for the current and future years is 25%. The following items caused financial income and taxable income to differ: A. Depreciation on the tax return is greater than the depreciation on the income statement by $10,000. B. Rent collected on the tax return is greater than rent recognized on the income statement by $18,000. C. Interest of $15,000 was collected on...
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