# BUSINESS AND FINANCE EXAMPLE PROBLEMS

Jun 21st, 2015
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1. Your corporation has the following cash flows: Operating income \$250,000 Interest received 10,000 Interest paid 5,000 Dividends received 20,000 Dividends paid 50,000

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CHAPTER TWO PROBLEMS 1.Your corporation has the following cash flows: Operating income \$250,000 Interest received 10,000 Interest paid 45,000 Dividends received 20,000 Dividends paid 50,000If the applicable tax table is as follows: Taxable Income Rate -------------- ---- \$ 0 - 25,000 16% 25 - 50,000 19 50 - 75,000 30 75 -100,000 40 over 100,000 46What is the corporation's tax liability?\$80,5302.Last year Rattner Robotics had \$5 million in operating income (EBIT). The company had net depreciation expense of \$1 million and an interest expense of \$1 million; its corporate tax rate was 40 percent. The company has \$14 million in current assets and \$4 million in non-interest-bearing current liabilities; it has \$15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10 percent. Assume that Rattner's only non-cash item is depreciation.a. What was the company's net income for the year?\$2.4 millionb. What was the company's net cash flow?\$3.4 millionc. What was the company's net operating profit after taxes (NOPAT)?\$3.0 milliond. What was the company's operating cash flow?\$4.0 milli

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