Reference no: EM13949992
Which of the following statements is CORRECT?
A. Since depreciation is a cash expense, the faster an asset is depreciated, the lower the projected NPV from investing in the asset.
B. Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 years or longer.
C. Corporations must use the same depreciation method for both stockholder reporting and tax purposes.
D. Using accelerated depreciation rather than straight line normally has the effect of speeding up cash flows and thus increasing a project’s forecasted NPV.
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What is the earnings per share and the dividends per share
: Billy’s Exterminators, Inc., has sales of $740,000, costs of $288,000, depreciation expense of $40,000, interest expense of $30,000, a tax rate of 35 percent and paid out $50,600 in cash dividends. The common stock outstanding is 92,000 shares. What ..
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What was net capital spending
: Earnhardt Driving School’s 2010 balance sheet showed net fixed assets of $4.7 million, and the 2011 balance sheet showed net fixed assets of $5.3 million. The company’s 2011 income statement showed a depreciation expense of $405,000. What was net cap..
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What is the company cost of equity
: Chandeliers Corp. has no debt but can borrow at 7.8 percent. The firm’s WACC is currently 9.6 percent, and the tax rate is 35 percent. What is the company’s cost of equity? If the firm converts to 30 percent debt, what will its cost of equity be? If ..
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What is the addition to retained earnings
: Billy’s Exterminators, Inc., has sales of $589,000, costs of $278,000, depreciation expense of $30,000, interest expense of $25,000, a tax rate of 35 percent and paid out $60,000 in cash dividends. What is the addition to retained earnings?
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Depreciation method for stockholder reporting-tax purposes
: Since depreciation is a cash expense, the faster an asset is depreciated, the lower the projected NPV from investing in the asset. Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 y..
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The bonds make annual payments
: The Timberlake-Jackson Wardrobe Co. has 10.6 percent coupon bonds on the market with ten years left to maturity. The bonds make annual payments. Required: If the bond currently sells for $1,152.27, what is its YTM?
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Best strategy for your athletic business
: The New Shoes simulation offers three regions in which your athletic company operates. The foreign region may be an option for your organization as the simulation develops. Which strategies would be best suited to meet the needs of your foreign marke..
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How does the current policy compare with the optimal policy
: New England Charm, Inc. specializes in selling scented candles. The company has established a policy of reordering inventory every 30 days. A recently employed MBA has considered New England's inventory problem from the EOQ model viewpoint. If the fo..
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What is after-tax cost of debt
: Micro Spinoffs, Inc., issued 20-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,050. If the firm’s tax bracket is 40%, what is its after-tax cost of debt?
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