Suppose that LilyMac Photography expects EBIT to be approximately $95,000 per year for the foreseeable future, and t...
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Suppose that LilyMac Photography expects EBIT to be approximately $95,000 per year for the foreseeable future, and that it has 400 10-year, 4 percent annual coupon bonds outstanding. (Use Table 11.1) |
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What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC? |
| Tax rate | % |
Homework Answers
Answer
As per the federal slab, the EBIT of $ 95000 falls under the 34% tax bracket. Therefore, the tax rate to be used for the WACC calculation is 34%
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Suppose that LilyMac Photography expects EBIT to be approximately $95,000 per year for the foreseeable future, and t...
Suppose that LilyMac Photography expects EBIT to be approximately $200,000 per year for the foreseeable future,...
Suppose that LilyMac Photography expects EBIT to be approximately $200,000 per year for the foreseeable future, and that it has 1,000 10-year, 9 percent annual coupon bonds outstanding. (Use Table 11.1.) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate %
PDQ, Inc., expects EBIT to be approximately $14.8 million per year for the foreseeable future, and...
PDQ, Inc., expects EBIT to be approximately $14.8 million per year for the foreseeable future, and it has 100,000 20-year, 8 percent annual coupon bonds outstanding. (Use Table 11.1) What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.) Tax rate %
PDQ, Inc. expects EBIT to be approximately $11 million per year for the foreseeable future, and that it has 25,000 20-ye...
PDQ, Inc. expects EBIT to be
approximately $11 million per year for the foreseeable future, and
that it has 25,000 20-year, 8 percent annual coupon bonds
outstanding. (Use Table 11.1.)
What would the appropriate tax rate be for use in the calculation
of the debt component of PDQ’s WACC?
table 11.1 Corporate Tax Rates Tax Rat Taxable Income $0 - $50,000 50,001 - 75,000 15% 75,001 100,000 100,001 - 335,000 335,001 - 10,000,000 10,000,001 - 15,000,001 - 15,000,000 18,333,333 38...
PDQ, Inc. expects EBIT to be approximately $13.3 million per year for the foreseeable future, and it has 40,000 20-year,...
PDQ, Inc. expects EBIT to be approximately $13.3 million per year for the foreseeable future, and it has 40,000 20-year, 10 percent annual coupon bonds outstanding. (Use Table 11.1.) What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.) Tax Rate: ______.__% table 11.1 Corporate Tax Rates Taxable Income Tax Rate $0 - $50,000 15% 50,001 - 75,000 25 75,001 100,000 100,001 335,000 335,001...
Problem 11-5 Tax Rate (LG11-3) Suppose that LilyMac Photography expects EBIT to be approximately $70,000 per...
Problem 11-5 Tax Rate (LG11-3) Suppose that LilyMac Photography expects EBIT to be approximately $70,000 per year for the foreseeable future, and that it has 300 10-year, 4 percent annual coupon bonds outstanding. (Use Table 111) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate % < Prey 5 of 10 Next > table 11.1 Corporate Tax Rates Taxable Income Tax Rate $0 $50,000 15% 50,001 75,000 25...
Meyer & Co. expects its EBIT to be $95,000 every year forever. The firm can borrow...
Meyer & Co. expects its EBIT to be $95,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent and the tax rate is 23 percent. The company borrows $153,000 and uses the proceeds to repurchase shares. A) What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) B)...
11-17, WACC. please show formula using Excel 11-15 WACC Suppose lidl Tup 35 percent debt, and...
11-17, WACC. please show formula using Excel
11-15 WACC Suppose lidl Tup 35 percent debt, and that its before-tax cost of UED 10 equity is 13 percent. If the appropriate weighted average tax rate is 34 percent will be TapDance's WACC? (LG11-2) 11-16 WACC Suppose that JB Cos, has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 11 percent while its cost of equity is 15 percent. If the appropriate...
Suppose you are trying to estimate the after tax cost of debt for a firm as...
Suppose you are trying to estimate the after tax cost of debt for a firm as part of the calculation of the Weighted Average Cost of Capital (WACC). The corporate tax rate for this firm is 32%. The firm's bonds pay interest semiannually with a 6.9% coupon rate and have a maturity of 14 years. If the annual yield to maturity of the bonds is 6.61%, what is the after tax cost of debt for this firm? (Answer to the...
Flavortech Inc. expects EBIT of $2,000,000 for the coming year. The firm’s capital structure consists of...
Flavortech Inc. expects EBIT of $2,000,000 for the coming year. The firm’s capital structure consists of 40 percent debt and 60 percent equity, and its marginal tax rate is 40 percent. The company pays a 10 percent interest rate on its $5,000,000 of long-term debt. One million shares of common stock are outstanding. In its next capital budgeting cycle, the firm expects to fund one large positive NPV project costing $1,200,000, and it will fund this project in accordance with...
LP Bean Company, an all equity company, has an EBIT of $1,200,000 that it expects it...
LP Bean Company, an all equity company, has an EBIT of $1,200,000 that it expects it will earn forever, and it pays all of its earnings as dividends to shareholders (i.e., no growth). The firm has a corporate tax rate of 45% and has an un-levered beta of 1.25. In the market, you observe that Government T-bills are being sold to yield 3% and the market risk premium is 6%. Assume a world of taxes and a cost for the...
Suppose that LilyMac Photography expects EBIT to be approximately $200,000 per year for the foreseeable future, and that it has 1,000 10-year, 9 percent annual coupon bonds outstanding. (Use Table 11.1.) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate %
PDQ, Inc. expects EBIT to be
approximately $11 million per year for the foreseeable future, and
that it has 25,000 20-year, 8 percent annual coupon bonds
outstanding. (Use Table 11.1.)
What would the appropriate tax rate be for use in the calculation
of the debt component of PDQ’s WACC?
table 11.1 Corporate Tax Rates Tax Rat Taxable Income $0 - $50,000 50,001 - 75,000 15% 75,001 100,000 100,001 - 335,000 335,001 - 10,000,000 10,000,001 - 15,000,001 - 15,000,000 18,333,333 38...
Problem 11-5 Tax Rate (LG11-3) Suppose that LilyMac Photography expects EBIT to be approximately $70,000 per year for the foreseeable future, and that it has 300 10-year, 4 percent annual coupon bonds outstanding. (Use Table 111) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate % < Prey 5 of 10 Next > table 11.1 Corporate Tax Rates Taxable Income Tax Rate $0 $50,000 15% 50,001 75,000 25...
11-17, WACC. please show formula using Excel
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