AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 02-03 The difference between average and marginal tax rates. Section: 2.3 Topic: Average tax rate 59. Crandall Oil has total sales of $1,349,800 and costs of $903,500. Depreciation is $42,700 and the tax rate is 34 percent. The firm does not have any interest expense. What is the operating cash flow? Earnings before interest and taxes = $1,349,800 - $903,500 - $42,700 = $403,600 Tax = $403,600 × .34 = $137,224 Operating cash flow = $403,600 + $42,700 - $137,224 = $309,076 Analytic Blooms: Apply Difficulty: 1 Easy Learning Objective: 02-04 How to determine a firm's cash flow from its financial statements. Section: 2. 4 Topic: OCF 60. Nielsen Auto had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a combined book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending? Net capital spending = $209,411 - $218,470 + $42,822 = $33,763
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 02-03 The difference between average and marginal tax rates. Section: 2.3 Topic: Average tax rate 59. Crandall Oil has total sales of $1,349,800 and costs of $903,500. Depreciation is $42,700 and the tax rate is 34 percent. The firm does not have any interest expense. What is the operating cash flow? Earnings before interest and taxes = $1,349,800 - $903,500 - $42,700 = $403,600 Tax = $403,600 × .34 = $137,224 Operating cash flow = $403,600 + $42,700 - $137,224 = $309,076 Analytic Blooms: Apply Difficulty: 1 Easy Learning Objective: 02-04 How to determine a firm's cash flow from its financial statements. Section: 2. 4 Topic: OCF 60. Nielsen Auto had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a combined book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending? Net capital spending = $209,411 - $218,470 + $42,822 = $33,763
Test%20Bank%20for%20Fundamentals%20of%20Corporate%20Finance%2010th%20Edition%20Ross,%20Westerfield.docx