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Assignment 1 fin101

Assignment 1 fin101

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Assignment 1 FIN101

Course Name: Principles of Finance

Student’s Name:

Course Code: FIN101

Student’s ID Number:

Semester: 2

CRN: 21731

Academic Year: 1440/1441 H

For Instructor’s Use only

Instructor’s Name:

Students’ Grade: / 5

Level of Marks: High/Middle/Low

Instructions:

➢ This Assignment must be submitted on Blackboard (WORD format only) via the allocated

folder.

➢ Email submission will not be accepted.

➢ You are advised to make your work clear and well-presented; marks may be reduced for poor

presentation. This includes filling your information on the cover page.

➢ Assignment will be evaluated through BB Safe Assign tool.

➢ Late submission will result in ZERO marks being awarded.

➢ The work should be your own, copying from students or other resources will result in ZERO

marks.

➢ Use Times New Roman font 12 for all your answers.

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Assignment Questions

Q1 (2 marks)

Altamimi Company’s net income for the year 2000, is $3,700,214. The company had an EBITDA of $ 10,125,300,

and its depreciation and amortization expense was equal to $2,543,790. The company's average tax rate is 35

percent.

What is the amount of interest expenses for the firm? (Show the details of your calculations).

Net income = $3,700,214, EBITDA = $10,125,300, depreciation and amortization expense = $2,543,790,

Tax rate = 35%

Net income = 65% × EBT = 3,700,214

EBT =

3,700,214

65%

= 5,692,641.53

N𝑜𝑤, E𝐵𝐼𝑇 = EBITDA − Depreciation and amortization expense

EBIT = $10,125,300 − $2,543,790

EBIT = $7,581,510

Though, taxable income = EBIT − Interest expense

$5,692,637 = $7,581,510 − Interest expense

Interest expense = $1,888,873

Prepare a common sized Income Statement if sales equal $12,000,000.

Common size income statement

sales

$12,000,000

100%

Costs at goods sold

$1,874,700

15.62%

EBITDA

$10,125,300

84.38%

Depreciation and Amortization Expense

$2,543,790

21.20%

EBIT

$7,581,510

63.18%

Interest Expense

$1,888,873

15.74%

Taxable Income

$5,692,637

47.44%

Taxes

$1,992,423

16.60%

Net income

$3,700,214

30.84%

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Assignment 1 FIN101 Course Name: Principles of Finance Student’s Name: Course Code: FIN101 Student’s ID Number: Semester: 2nd CRN: 21731 Academic Year: 1440/1441 H For Instructor’s Use only Instructor’s Name: Students’ Grade: /5 Level of Marks: High/Middle/Low Instructions: ➢ This Assignment must be submitted on Blackboard (WORD format only) via the allocated folder. ➢ Email submission will not be accepted. ➢ You are advised to make your work clear and well-presented; marks may be reduced for poor presentation. This includes filling your information on the cover page. ➢ Assignment will be evaluated through BB Safe Assign tool. ➢ Late submission will result in ZERO marks being awarded. ➢ The work should be your own, copying from students or other resources will result in ZERO marks. ➢ Use Times New Roman font 12 for all your answers. Assignment Questions Q1 (2 marks) Altamimi Company’s net income for the year 2000, is $3,700,214. The company had an EBITDA of $ 10,125,300, and its depreciation and amortization expense was equal to $2,543,790. The company's average tax rate is 35 percent. a. What is the amount of interest expenses for the firm? ...
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