Jake owns The Corner Market which he is trying to sell so that he can retire and travel. The Corner Market owns the building in which it is located. This building was built at a cost of $647,000 and is currently appraised at $819,000. The counters and fixtures originally cost $148,000 and are currently valued at $65,000. The inventory is valued on the balance sheet at $319,000 and has a retail market value equal to 1.2 times its cost. Jake expects the store to collect 98 percent of the $21,700 in accounts receivable. The firm has $26,800 in cash and has total debt of $414,700. What is the market value of this firm?
Market value of firm = $819,000 + $65,000 + 1.2($319,000) + .98($21,700) + $26,800 - $414,700 = $900,166
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53.
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Jensen Enterprises paid $1,300 in dividends and $920 in interest this past year. Common stock increased by $1,200 and retained earnings decreased by $310. What is the net income for the year?
Net income = $1,300 + (-$310) = $990
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54.
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Andre's Bakery has sales of $687,000 with costs of $492,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 35 percent. What is the net income?
Net income = ($687,000 - $492,000 - $26,000 - $42,000) (1 - .35) = $82,550
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55.
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Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense. The addition to retained earnings is $418 and net new equity is $500. The tax rate is 35 percent. Sales are $15,900 and depreciation is $680. What are the earnings before interest and taxes?
Net income = $75 + $418 = $493
Taxable income = $493/(1 - .35) = $758.46 Earnings before interest and taxes = $758.46 + $511 = $1,269.46 |
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