Reynolds Construction (RC) needs a piece of equipment that costs

Reynolds Construction (RC) needs a piece of equipment that costs $100,000. The equipment has an economic life of 2 years and no residual value. The equipment will not require maintenance because its useful life is so short. RC can borrow the full cost of the equipment at an interest rate of 8% with payments due at the end of the year. Alternatively, RC can lease the equipment for $55,000 with payments due at the end of the year. Assume RC chooses the lease, which is a finance lease for financial reporting purposes. Answer the following questions. 

a. What is the initial lease liability that must be reported on the balance sheet?

b. What is the initial right-of-use asset?

c. What will RC report as an interest expense at Year 1?

d. What will RC report as an amortization expense at Year 1?

e. What will RC report as the lease liability at Year 1?

f. What will RC report as the right-of-use asset at Year 1?

Tired of numerous paper assignments?
Rely on us and receive professional paper writing assistance!
Professional paper Writing Assistance

Who We Are

We are a professional website for customized writing. If you searched a question and stumbled into our website, you are in the right place to receive assistance with your coursework.

Do you handle any type of coursework?

Yes. We have displayed prior orders to demonstrate our experience. We can answer this question for you as we have previously. Please fill out our Order Form so that we may ensure its flawlessness. Correctly completing the order form will help our staff with reference, requirements, and future communication.

Is it hard to Place an Order?

  1. Click on the “Order Now” tab at the top menu or “GET A FREE QUOTE” icon at the bottom and a new page will appear with an order form to be filled
  2. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process. Submit detailed paper instructions, upload necessary files if needed and provide your contact information – you are almost done!
  3. Proceed with the payment- click on “PROCEED TO CHECKOUT” at the bottom of the page. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it. All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.
  4. Delivery- Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it.

Crane Rafting Corporation is considering an acquisition of Frost Ski

Crane Rafting is considering an acquisition of Frost Ski Supplies. Frost has a pre-merger 8% unlevered cost of equity, 6% pre-tax cost of debt, and 25% tax rate. Its pre-merger forecasted free cash flows and debt are expected to grow at a constant 5% rate after Year 4. Frost has 800 million outstanding shares.

If Crane makes the acquisition, synergies will increase Frost’s free cash flows.

Crane will also add debt at Frost’s 6% rate. Crane’s tax rate is 25%. The post-merger forecasted free cash flows and debt are expected to grow at a constant 5% rate after Year 4.

Data for Frost’s pre-merger and post-merger FCF and debt are shown here:

a. What is Frost’s pre-merger unlevered horizon value? What is its Year-0 unlevered value?

b. What is Frost’s pre-merger horizon value tax shield? What is its Year-0 tax shield value? Assume debt is added on the first day of the year; that is, calculate interest expenses for Year t based on debt at Year t.

c. What is Frost’s current value of levered operations? What is its value of equity? What is the minimum stock price per share that Frost’s shareholders should accept?

d. What is Frost’s post-merger unlevered horizon value to Crane? What is its Year-0 unlevered value?

e. What is Frost’s post-merger horizon value tax shield to Crane? What is its Year-0 tax shield value? Assume debt is added on the first day of the year; that is, calculate interest expenses for Year t based on debt at Year t.

f. What is Frost’s post-merger Year-0 value of levered operations to Crane? What is its value of equity? (Hint: Remember that Crane assumes Frost’s debt and subsequently issues more debt.) What is the maximum stock price per share that Crane should offer?

g. What percentage of Frost’s pre-merger at Year 4 consisted of debt? You already have the values you need to calculate the total value at the horizon.

What percentage after the merger? How much of Frost’s post-merger increase in value to Crane is due to improved FCF?

Tired of numerous paper assignments?
Rely on us and receive professional paper writing assistance!
Professional paper Writing Assistance

Who We Are

We are a professional website for customized writing. If you searched a question and stumbled into our website, you are in the right place to receive assistance with your coursework.

Do you handle any type of coursework?

Yes. We have displayed prior orders to demonstrate our experience. We can answer this question for you as we have previously. Please fill out our Order Form so that we may ensure its flawlessness. Correctly completing the order form will help our staff with reference, requirements, and future communication.

Is it hard to Place an Order?

  1. Click on the “Order Now” tab at the top menu or “GET A FREE QUOTE” icon at the bottom and a new page will appear with an order form to be filled
  2. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process. Submit detailed paper instructions, upload necessary files if needed and provide your contact information – you are almost done!
  3. Proceed with the payment- click on “PROCEED TO CHECKOUT” at the bottom of the page. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it. All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.
  4. Delivery- Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it.

Jenny Cochran, a graduate of the University of Tennessee with

Jenny Cochran, a graduate of the University of Tennessee with 4 years of experience as an equities analyst, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of computer components. During the previous year, Computron had doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Cochran was assigned to evaluate the impact of the changes. She began by gathering and other data.

Assume that you are Cochran’s assistant and that you must help her answer the following questions:

a. What effect did the expansion have on sales and net income? What effect did the expansion have on the asset side of the balance sheet? What effect did it have on liabilities and equity?

b. What do you conclude from the statement of cash flows?

c. What is free cash flow? Why is it important? What are FCF’s five uses?

d. What is Computron’s net operating profit after taxes (NOPAT)? What are operating current assets? What are operating current liabilities? How much net operating working capital and total net operating capital does Computron have?

e. What is Computron’s free cash flow? What are Computron’s “net uses” of its FCF?

f. Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value?

g. Cochran also has asked you to estimate Computron’s Economic Value Added (EVA). She estimates that the after-tax cost of capital was 10% in both years.

h. What happened to Computron’s Market Value Added (MVA)?

i. The Tax Cut and Jobs Act (TCJA) was signed into law in 2017. Briefly describe its key provisions for corporate taxes.

j. Assume that a has $87 million of taxable income from operations. It also received interest income of $8 million and dividend income of $10 million. The federal tax rate is 21%, and the dividend exclusion rate is 50%. What is its taxable income and federal tax liability?

k. Briefly describe the TCJA’s key provisions for personal taxes.

l. Assume that you are in the 25% marginal tax bracket and that you have $20,000 to invest. You have narrowed your investment choices down to municipal bonds yielding 7% or equally risky corporate bonds with a yield of 10%. Which one should you choose and why? At what marginal tax rate would you be indifferent?

Tired of numerous paper assignments?
Rely on us and receive professional paper writing assistance!
Professional paper Writing Assistance

Who We Are

We are a professional website for customized writing. If you searched a question and stumbled into our website, you are in the right place to receive assistance with your coursework.

Do you handle any type of coursework?

Yes. We have displayed prior orders to demonstrate our experience. We can answer this question for you as we have previously. Please fill out our Order Form so that we may ensure its flawlessness. Correctly completing the order form will help our staff with reference, requirements, and future communication.

Is it hard to Place an Order?

  1. Click on the “Order Now” tab at the top menu or “GET A FREE QUOTE” icon at the bottom and a new page will appear with an order form to be filled
  2. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process. Submit detailed paper instructions, upload necessary files if needed and provide your contact information – you are almost done!
  3. Proceed with the payment- click on “PROCEED TO CHECKOUT” at the bottom of the page. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it. All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.
  4. Delivery- Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it.

Cumberland Industries’ most recent balance sheets (in thousands of dollars)

Cumberland Industries’ most recent balance sheets (in thousands of dollars) are shown, below and in the partial model in the file: a. The company’s sales for 2015 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation amounted to 11% of net fixed assets, interest charges were $8,575,000, the corporate tax rate was 40%, and […]

Tired of numerous paper assignments?
Rely on us and receive professional paper writing assistance!
Professional paper Writing Assistance

Who We Are

We are a professional website for customized writing. If you searched a question and stumbled into our website, you are in the right place to receive assistance with your coursework.

Do you handle any type of coursework?

Yes. We have displayed prior orders to demonstrate our experience. We can answer this question for you as we have previously. Please fill out our Order Form so that we may ensure its flawlessness. Correctly completing the order form will help our staff with reference, requirements, and future communication.

Is it hard to Place an Order?

  1. Click on the “Order Now” tab at the top menu or “GET A FREE QUOTE” icon at the bottom and a new page will appear with an order form to be filled
  2. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process. Submit detailed paper instructions, upload necessary files if needed and provide your contact information – you are almost done!
  3. Proceed with the payment- click on “PROCEED TO CHECKOUT” at the bottom of the page. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it. All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.
  4. Delivery- Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it.