Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 1. abc corporation recently reported $12,500 of sa

1. ABC Corporation recently reported $12,500 of sales, $7,250 of operating costs other than depreciation,...

80.2K

Verified Solution

Question

Finance

1. ABC Corporation recently reported $12,500 of sales, $7,250 of operating costs other than depreciation, and $1,000 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 in bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%.

(a) What is the companys EBIT

(b)What is the companys net income?

2. Last year, Smith Industries reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges. It had $5,000 of bonds outstanding that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. This years data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $750. By how much will net after-tax income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting purposes.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students