Business, 25.11.2019 21:31 Zachgrainger4436
Suppose green rabbit transportation inc. is considering a project that will require $300,000 in assets.
• the company is small, so it is exempt from the interest deduction limitation under the new tax law.
• the project is expected to produce earnings before interest and taxes (ebit) of $50,000.
• common equity outstanding will be 10,000 shares.
• the company incurs a tax rate of 25%. if the project is financed using 100% equity capital, then green rabbit transportation inc.’s return on equity (roe) on the project will be . in addition, green rabbit’s earnings per share (eps) will be . alternatively, green rabbit transportation inc.’s cfo is also considering financing the project with 50% debt and 50% equity capital. the interest rate on the company’s debt will be 11%. because the company will finance only 50% of the project with equity, it will have only 5,000 shares outstanding. green rabbit transportation inc.’s roe and the company’s eps will be if management decides to finance the project with 50% debt and 50% equity.
Answers: 2
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Business, 22.06.2019 11:10
Wilson company paid $5,000 for a 4-month insurance premium in advance on november 1, with coverage beginning on that date. the balance in the prepaid insurance account before adjustment at the end of the year is $5,000, and no adjustments had been made previously. the adjusting entry required on december 31 is: (a) debit cash. $5,000: credit prepaid insurance. $5,000. (b) debit prepaid insurance. $2,500: credit insurance expense. $2500. (c) debit prepaid insurance. $1250: credit insurance expense. $1250. (d) debit insurance expense. $1250: credit prepaid insurance. $1250. (e) debit insurance expense. $2500: credit prepaid insurance. $2500.
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Business, 22.06.2019 16:10
The following are line items from the horizontal analysis of an income statement:increase/ (decrease) increase/ (decrease) 2017 2016 amount percent fees earned $120,000 $100,000 $20,000 20% wages expense 50,000 40,000 10,000 25 supplies expense 2,000 1,700 300 15 which of the items is stated incorrectly? a. fees earned b. supplies expense c. none of these choices are correct. d. wages expense
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Business, 22.06.2019 16:50
Coop inc. owns 40% of chicken inc., both coop and chicken are corporations. chicken pays coop a dividend of $10,000 in the current year. chicken also reports financial accounting earnings of $20,000 for that year. assume coop follows the general rule of accounting for investment in chicken. what is the amount and nature of the book-tax difference to coop associated with the dividend distribution (ignoring the dividends received deduction)?
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Suppose green rabbit transportation inc. is considering a project that will require $300,000 in asse...
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