Analysis of stockholders' equity Star Corporation issued both common and preferred stock during 20X6. The stockholders' equity sections of the company's balance sheets at the end of 20X6 and 20X5 follow: 20X6 20X5 Preferred stock, $100 par value, 10% $580,000 $500,000 Common stock, $10 par value 2,350,000 1,750,000 Paid-in capital in excess of par value Preferred 24,000 — Common 4,620,000 3,600,000 Retained earnings 8,470,000 6,920,000 Total stockholders' equity $16,044,000 $12,770,000 a. Compute the number of preferred shares that were issued during 20X6. 100 b. Calculate the average issue price of the common stock sold in 20X6. $27 c. By what amount did the company's paid-in capital increase during 20X6?
What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? (100 X vol) – (25 X vol) – 500,000=100,000 (75 X vol) – 500,000 = 100,000 75 X vol – 600,000/75 = 8,000 Total volume = 8,000 d. Sketch out a CVP analysis graph depicting the base case situation e. Now assume that the practice contracts with one HMO, and the plan proposes a 20 percent discount from charges. Redo questions a, b, c, d, under these condition. 2.
A. $16,500 B. $9,000 C. $25,500 D. $7,500 E. $50,000 Difficulty: Easy 2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2008, Dew reported income of $250,000 and paid dividends of $80,000.
$1,500,000/$12,000,000 = 0.125 or 12.5% Each dollar of revenue produces 12.5% of net income or profit. Cash flow= cash generated during the year The rough estimation of cash flow = net income + non -cash expenses, in this case, $1,500,000 + $1,500,000 = 3,000,000 C. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Brandywine’s net income, total profit margin, and cash flow? Brandywine Homecare Income statement with double depreciation expense: Month ending December 31, 2007 Revenue $12,000,000 Total revenue $12,000,000 Expenses: Depreciation $ 1,500,000x2= 3,000,000 Other 12,000,000 x 75/100 = 9,000,000 Total expenses= Depreciation + Other expenses= 1,500,000x2+ 9,000,000= $12,000,000 Total revenue – total expenses = Net income or Profit - 12,000,000- 12,000,000= 0 What
What is the amount of its credit carryover and the last year to which the carryover could be used? Answer: $7,750 carried over to 2004 or 2025 4. Margolin Corporation has a regular taxable income of $120,000. It has a positive adjustment of $90,000, preference items of $50,000 and negative adjustments of $40,000. What is its alternative minimum tax?
Initial value of Pacific ridge investment (December 1995) is: 666,667 * $1.50 + 133,333 * $0.3 = $1,040,000.4 (initial investment, exhibit 7). If we now value the rest of the company’s stock before venture capitalist investment at $1.50, we have: $1.50 * (800,000 + 4,796,000) =
Finding the initial investment Answer: $20,000 Purchase price of new machinery $3,000 Installation costs $4,500 After-tax proceeds from sale of old machinery $18,500 Initial investment E11-4. Book value and recaptured depreciation $175,000 $124, 250 $110,000 $50,750 $50, 750 $59,250 Recaptured depreciation E11-5. Initial investment purchase price installation costs – after-tax proceeds from sale of old asset change in net working capital $55,000 $7,500 – $23,750 $2,000 $40,750 Answer: Book value Answer: Initial investment CAPITAL BUDGETING PROBLEMS: CHAPTER 11 Solutions to Problems Note: The MACRS depreciation percentages used in the following problems appear in Chapter 4, Table 4.2. The percentages are rounded to the nearest integer for ease in calculation. For simplification, 5-year-lived projects with 5 years of cash inflows are typically used throughout this chapter.
Select the correct answer. $199,990 | | | $755,322 | | | $955,312 | | | $139,358 | | 8. Variable costs as a percentage of sales for Leamon Inc. are 61%, current sales are $517,801. and fixed costs are $197,934. How much will operating income change if sales increase by $41,139?
d. increase by $1,400. status: incorrect (0.0) correct: a your answer: b feedback: Incorrect. [600 × $3] - [700 × ($8 - $6)] = $400 decrease ________________________________________ 3 The following information pertains to the Norfolk Company's three products: Assume that Product C is discontinued and the extra space is devoted to the production of Product A. Product A production is increased to 500 units per year, but the selling price on all units of A is reduced to $7.00. Assuming everything
What would be the impact on monthly sales cost, and income? Regular Selling Price Impact: Price $4,350 Quantity $3,000 Revenue $13,050,000 Variable Manufacturing Costs ($5,385,000) Variable Marketing Costs ($825,000) Contribution Margin $6,840,000 *Fixed Manufacturing Costs ($1,980,000) *Fixed Marketing Costs ($2,310,000) Income $2,550,000 Using the regular selling price Income = Revenues – Total costs = $13,050,000 - $10,500,000 = $2,550,000 * Continue to the next page New Selling Price Impact: Price $3,850 Quantity $3,500 Revenue $13,475,000 Variable Manufacturing Costs ($6,282,500) Variable Marketing Costs ($962,500) Contribution Margin $6,230,000 Fixed Manufacturing Costs ($1,980,000) Fixed Marketing Costs ($2,310,000) Income $1,940,000 2) After price reduction, income = $13,475,000 - $11,535,000 =