2. Corporate Tax LiabilityTo complete the assignments listed below, refer to the Table 2-1.The Talley Corporation had a taxable income of $300,000 from operations after all operating costs but before (1) interest charges of $30,000, (2) dividends received of $18,000, (3) dividends paid of $18,000, and (4) income taxes.What are the firm’s income tax liability and its after-tax income? Round your answers to two decimal places.Income tax liability $ After-tax income $ 3. Balance Sheet AnalysisComplete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:Total assets turnover: 2.1Gross profit margin on sales: (Sales – Cost of goods sold)/Sales = 24% Total liabilities-to-assets ratio: 35%Quick ratio: 1.05 Days sales outstanding (based on 365-day year): 36 days Inventory turnover ratio: 3.0Round your answers to the nearest whole dollar.Partial Income StatementInformationSales $ Cost of goods sold $ Balance SheetCash $ Accounts payable $ Accounts receivable $ Long-term debt $ 50,000Inventories $ Common stock $ Fixed assets $ Retained earnings $ 100,000Total assets $ 400,000 Total liabilities and equity $ 4. PV and Effective Annual RateAssume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of $50 (1 payment at the end of each of the next 4 years) plus an extra payment of $1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of $950 each. Your money is now invested in a bank that pays an 12% nominal (quoted) interest rate but with quarterly compounding. You regard the securities as being just as safe, and as liquid, as your bank deposit, so your required effective annual rate of return on the securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their present value to you? Round your answer to the nearest cent.$ 5. Amortization ScheduleSet up an amortization schedule for a $15,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 12%. Round your answers to the nearest cent. Enter “0” if requiredYear Payment Repayment Interest Repayment of Principal Balance1 $ $ $ $ 2 $ $ $ $ 3 $ $ $ $ 4 $ $ $ $ 5 $ $ $ $ Total $ $ $ How large must each annual payment be if the loan is for $30,000? Assume that the interest rate remains at 12% and that the loan is paid off over 5 years. Round your answer to the nearest cent.$ How large must each payment be if the loan is for $30,000, the interest rate is 12%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent.$ 6. Free Cash FlowsRhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2013 2012Sales $8,450.0 $6,500.0Operating costs excluding depreciation 6,971.0 5,525.0Depreciation and amortization 203.0 163.0Earnings before interest and taxes $1,276.0 $812.0 Less: Interest 182.0 140.0Pre-tax income $1,094.0 $672.0 Taxes (40%) 437.6 268.8Net income available to common stockholders $656.4 $403.2Common dividends $591.0 $323.0Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2013 2012AssetsCash $86.0 $78.0Short-term investments 43.0 33.0Accounts receivable 894.0 715.0Inventories 2,028.0 1,560.0Total current assets $3,051.0 $2,386.0Net plant and equipment 2,031.0 1,625.0Total assets $5,082.0 $4,011.0Liabilities and EquityAccounts payable $468.0 $390.0Accruals 215.0 195.0Notes payable 169.0 130.0Total current liabilities $852.0 $715.0Long-term bonds 1,690.0 1,300.0Total liabilities $2,542.0 $2,015.0Common stock 2,354.6 1,876.0Retained earnings 185.4 120.0Total common equity $2,540.0 $1,996.0Total liabilities and equity $5,082.0 $4,011.0Using Rhodes Corporation’s financial statements (shown above), answer the following questions.What is the net operating profit after taxes (NOPAT) for 2013? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.$ millionWhat are the amounts of net operating working capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.2013 $ million2012 $ millionWhat are the amounts of total net operating capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.2013 $ million2012 $ millionWhat is the free cash flow for 2013? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.$ millionWhat is the ROIC for 2013? Round your answer to two decimal places. %How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.) Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.After-tax interest payment $ million Reduction (increase) in debt $ million Payment of dividends $ million Repurchase (Issue) stock $ million Purchase (Sale) of short-term investments $ million7. Future Value of an Annuity for Various Compounding PeriodsFind the future values of the following ordinary annuities:FV of $600 paid each 6 months for 5 years at a nominal rate of 16%, compounded semiannually. Round your answer to the nearest cent.$ FV of $300 paid each 3 months for 5 years at a nominal rate of 16%, compounded quarterly. Round your answer to the nearest cent.$ 9. Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2013 (Thousands of Dollars)Cash $ 225,000 Accounts payable $601,866 Receivables 1,575,000 Notes payable 326,634 Inventories 1,125,000 Other current liabilities 525,000 Total current assets $2,925,000 Total current liabilities $1,453,500 Net fixed assets 1,350,000 Long-term debt 1,068,750 Common equity 1,752,750Total assets $4,275,000 Total liabilities and equity $4,275,000 Lozano Chip Company: Income Statement for Year Ended December 31, 2013 (Thousands of Dollars)Sales $7,500,000Cost of goods sold 6,375,000 Selling general and administrative expenses 825,000 Earnings before interest and taxes (EBIT) $ 300,000Interest expense 111,631 Earnings before taxes (EBT) $ 188,369 Federal and state income taxes (40%) 75,348 Net income $ 113,022 Calculate the indicated ratios for Lozano. Round your answers to two decimal places.Ratio Lozano Industry AverageCurrent assets/Current liabilities 2.0Days sales outstanding* days 35.0 daysCOGS/Inventory 6.7Sales/Fixed assets 12.1Sales/Total assets 3.0Net income/Sales % 1.2%Net income/Total assets % 3.6%Net income/Common equity % 9.0%Total debt/Total assets % 30.0%Total liabilities/Total assets % 60.0%*Calculation is based on a 365-day year.Construct the extended Du Pont equation for both Lozano and the industry. Round your answers to two decimal places.For the firm, ROE is %For the industry, ROE is %Outline Lozano’s strengths and weaknesses as revealed by your analysis

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