100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Business Finance Chapter 2 Exam Questions With Answers 100% Verified. £11.42   Add to cart
Quickly navigate to
Preview
  2.  
  3. INC.
  4.  
  5. INC.

Exam (elaborations)

Business Finance Chapter 2 Exam Questions With Answers 100% Verified.
 3 views  0 purchase
  • Module
  • INC.
  • Institution
  • INC.

Draiman, Inc., has sales of $588,000, costs of $270,000, depreciation expense of $69,500, interest expense of $36,500, and a tax rate of 40 percent. (Enter your answer as directed, but do not round intermediate calculations.) Required: What is the net income for this firm? - correct answer ...

[Show more]

Preview 2 out of 6  pages

Document information

  • November 6, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • business finance chapter 2

Written for

  • INC.
  • INC.

Seller

avatar-seller
RealGrades

Reviews received

Content preview

Business Finance Chapter 2

Draiman, Inc., has sales of $588,000, costs of $270,000, depreciation expense of $69,500, interest
expense of $36,500, and a tax rate of 40 percent. (Enter your answer as directed, but do not round
intermediate calculations.)




Required:

What is the net income for this firm? - correct answer Sales $588,000

Less COGS $270,000

Less Depreciation $69,500

EBIT$248,500

LESS Intrest $36,500

Tabable Income $212,000

LESS Taxes (40%) $84,800

Net Income $127,200



Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.1 million. The
machinery can be sold to the Romulans today for $6.3 million. Klingon's current balance sheet shows net
fixed assets of $2.9 million, current liabilities of $720,000, and net working capital of $131,000. If all the
current assets were liquidated today, the company would receive $835,000 cash.




Requirement 1:

What is the book value of Klingon's assets today? (Do not include the dollar sign ($).Enter your answer in
dollars, not millions of dollars, i.e. 1,234,567.)



Requirement 2:

, What is the market value? (Do not include the dollar sign ($). Enter your answer in dollars, not millions
of dollars, i.e. 1,234,567.) - correct answer Book Value of Assets= Current Assets +
Fixed Assets



Current Assets= Net Working Capital + Current Liabilities

131,000+720,000 = 851,000



Book Value= 851,000 + 2,900,000

=3,751,000



Market Value of Assets = 6,300,000 + 835,000

=7,135,000



Hammett, Inc., has sales of $19,720, costs of $9,310, depreciation expense of $1,980, and interest
expense of $1,470. Assume the tax rate is 40 percent. (Enter your answer as directed, but do not round
intermediate calculations.)




Required:

What is the operating cash flow? - correct answer Sales $19,720

LESS COGS $9,310

Less Depreciation $1,980

EBIT $8,430

LESS Intrest $1,470

Taxable Income $6,960

LESS Taxes(40%) $2784

Net Income $4,176




OCF = EBIT + Depreciation - Taxes

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller RealGrades. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £11.42. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

77254 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£11.42
  • (0)
  Add to cart