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Corporate Finance

Business

Quiz 15 :

Debt and Taxes

Quiz 15 :

Debt and Taxes

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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The interest rate tax shield for Kroger in 2004 is closest to:
Free
Multiple Choice
Answer:

Answer:

C

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Use the information for the question(s)below. Rosewood Industries has EBIT of $450 million,interest expense of $175 million,and a corporate tax rate of 21%. -The amount of Rosewood's interest tax shield is closest to:
Free
Multiple Choice
Answer:

Answer:

D

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Which of the following statements is FALSE?
Free
Multiple Choice
Answer:

Answer:

D

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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The total amount available to pay out to all the investors in Kroger in 2005 is closest to:
Multiple Choice
Answer:
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Use the information for the question(s)below. Rosewood Industries has EBIT of $450 million,interest expense of $175 million,and a corporate tax rate of 21%. -Rosewood's net income is closest to:
Multiple Choice
Answer:
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Use the information for the question(s)below. Fly by Night Aviation (FBNA)expects to have net income next year of $24 million and interest expense of $3 million.FBNA's corporate tax rate is 21%. -IF FBNA increases leverage so that its interest expense rises by $1 million,then the amount its unlevered EBIT will change is closest to:
Multiple Choice
Answer:
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Assume that investors hold Google stock in retirement accounts that are free from personal taxes.Also assume that Google's current pre-tax WACC is 14% and the corporate tax rate is 21%.If Google were to issue sufficient debt at a pre-tax cost of 7% to give them a debt-to-value ratio of 0.5,then the Google's after-tax WACC would be closest to:
Multiple Choice
Answer:
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Use the information for the question(s)below. Fly by Night Aviation (FBNA)expects to have net income next year of $24 million and interest expense of $3 million.FBNA's corporate tax rate is 21%. -IF FBNA increases leverage so that its interest expense rises by $1 million,then the amount its net income will change is closest to:
Multiple Choice
Answer:
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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The interest rate tax shield for Kroger in 2006 is closest to:
Multiple Choice
Answer:
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Use the information for the question(s)below. Rosewood Industries has EBIT of $450 million,interest expense of $175 million,and a corporate tax rate of 21%. -The total of Rosewood's net income and interest payments is closest to:
Multiple Choice
Answer:
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Use the following information to answer the question(s)below. Wyatt Oil issued $100 million in perpetual debt (at par)with an annual coupon of 7%.Wyatt will pay interest only on this debt.Wyatt's corporate tax rate is expected to be 21% for the foreseeable future. -Assume that five years have passed since Wyatt issued this debt.While tax rates have remained at 21%,interest rates have dropped so that Wyatt's current cost of debt capital is now only 4%.Wyatt's annual interest tax shield is now closest to:
Multiple Choice
Answer:
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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The income that would be available to equity holders in 2006 if Kroger was not levered is closest to:
Multiple Choice
Answer:
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Use the information for the question(s)below. Rosewood Industries has EBIT of $450 million,interest expense of $175 million,and a corporate tax rate of 21%. -If Rosewood had no interest expense,its net income would be closest to:
Multiple Choice
Answer:
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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The income that would be available to equity holders in 2005 if Kroger was not levered is closest to:
Multiple Choice
Answer:
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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -Calculate the interest tax shield,the total amount available to payout to all the investors,and the income that would be available to equity holders if Kroger was not levered for the year 2004.
Essay
Answer:
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Use the following information to answer the question(s)below. Wyatt Oil issued $100 million in perpetual debt (at par)with an annual coupon of 7%.Wyatt will pay interest only on this debt.Wyatt's corporate tax rate is expected to be 21% for the foreseeable future. -Wyatt's annual interest tax shield is closest to:
Multiple Choice
Answer:
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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The interest rate tax shield for Kroger in 2005 is closest to:
Multiple Choice
Answer:
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Use the following information to answer the question(s)below. Wyatt Oil issued $100 million in perpetual debt (at par)with an annual coupon of 7%.Wyatt will pay interest only on this debt.Wyatt's corporate tax rate is expected to be 21% for the foreseeable future. -The present value of Wyatt's annual interest tax shield is closest to:
Multiple Choice
Answer:
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Use the information for the question(s)below. Fly by Night Aviation (FBNA)expects to have net income next year of $24 million and interest expense of $3 million.FBNA's corporate tax rate is 21%. -FBNA's EBIT is closest to:
Multiple Choice
Answer:
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Use the table for the question(s)below. Consider the following income statement for Kroger Inc.(all figures in $ Millions): img -The total amount available to pay out to all the investors in Kroger in 2006 is closest to:
Multiple Choice
Answer:
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