By how much will their earnings after tax change

Assignment Help Financial Management

Reference no: EM131990066

1. Hicks Health Clubs, Inc., expects to generate an annual EBIT of $513,000 and needs to obtain financing for $1,090,000 of assets. Their tax bracket is 39%. If the firm goes with a short-term financing plan, their rate will be 7.0 percent, and with a long-term financing plan their rate will be 8.0 percent. By how much will their earnings after tax change if they choose the more aggressive financing plan instead of the more conservative?

$6,649

$10,649

$6,649

$10,649

2. Frisch Fish Corp expects net income next year to be $605,000. Inventory and accounts receivable will have to be increased by $295,000 to accommodate this sales level. Frisch will pay dividends of $391,000. How much external financing will Frisch Fish need assuming no organically generated increase in liabilities?

$81,000

$192,000

$101,000

$61,000

Reference no: EM131990066

Questions Cloud

What might cause firm to face capital constraints : What options do you have to address any and all deficits in cash over the next fiscal? What might cause a firm to face capital constraints? Provide an example

Assuming all employees have the same amount of np time : Assuming all employees have the same amount of NP time, calculate the direct nursing staff NP time for the new observation unit.

Forward premium/discount on the norwegian krones : What is the 90 day forward premium/discount on the Norwegian krones? Obtain a forecast of the krone-dollar 3 month ahead spot exchange rate.

Calculate the firm market value capital structure : The notes payable are to banks, and the interest rate on this debt is 10%, Calculate the firm’s market value capital structure.

By how much will their earnings after tax change : By how much will their earnings after tax change if they choose the more aggressive financing plan instead of the more conservative?

Describe the capital investment decision to be made : Describe the capital investment decision to be made, whether real or hypothetical.

What is net credit position : Kantorovich Company normally takes 21 days to pay for its average daily credit purchases of $2,000. What is its net credit position?

What is the profit on new sales : The cost of producing and selling is 84% of sales and the firm is in the 25% tax bracket. What is the profit on new sales?

Determine cash flow for investment evaluation purposes : Determine the cash flow for investment evaluation purposes. The tax rate is 0.35.

User Account

All Pages