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natima [27]
3 years ago
8

Masters, Inc., has sales of $37,900, costs of $15,000, depreciation expense of $2,400, and interest expense of $1,310. If the ta

x rate is 25 percent, what is the operating cash flow, or OCF?
Business
1 answer:
I am Lyosha [343]3 years ago
6 0

Answer:

Operating cash flow= $16,792.5

Explanation:

Giving the following information:

Masters, Inc., has sales of $37,900, costs of $15,000, depreciation expense of $2,400, and interest expense of $1,310.

<u>To calculate the operating cash flow, we need to use the following structure:</u>

Sales= 37,900

COGS= (15,000)

Gross profit= 22,900

Depreciation= (2,400)

Interest= (1,310)

EBT= 19,190

Tax= (19,190*0.25)= (4,797.5)

Depreciation= 2,400

Operating cash flow= 16,792.5

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For the following investments, identify whether they are: Trading debt securities. Available-for-sale debt securities. Held-to-m
AnnyKZ [126]

Answer:

(a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold.  - <u>Trading Debt Securities</u>

Trading debt securities such as these are held only for a short time before they are sold with the goal being short term profit.

(b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock.  - <u>None of the Above</u>

This is an Equity Investment.

(c) Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year.  - <u>Trading Debt Securities</u>

Like the bond in (a), this is being held for a short while only and then it will be sold so it is a Trading debt security.

(d) Bonds that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold.  - <u>Available-for-sale debt securities</u>

Available for sale debt securities are to be sold before maturity and therefore have no certain selling time. The bond above has no selling time as it might be sold at any point so it is an Available-for-sale debt security.

(e) Preferred stock was purchased for its constant dividend. The company is planning to hold the preferred stock for a long time.  -<u> None of the above.</u>

This is an Equity investment as well.

(f) A bond that matures in 10 years was purchased. The company is investing money set aside for an expansion project planned 10 years from now. - <u>Held-to-maturity debt securities.</u>

Held to Maturity bonds are bought with no intention of selling and the company hopes to hold them till they mature like this bond which will be held for 10 years.

7 0
3 years ago
Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth
Oksana_A [137]

Answer: $53.94

Explanation:

Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.

Terminal value = D₄ / ( required return - growth rate)

= (2.35 * 1.22³ * 1.05) / (12 % - 5%)

= $64

D₁ = 2.35 * 1.22 = $2.867

D₂ = 2.867 * 1.22 = $‭3.49774‬

D₃ = ‭3.49774‬ * 1.22 = $‭4.2672428‬

Share price = (2.867 / (1 + 12%)) + (‭3.49774‬ / 1.12²) + (‭4.2672428‬ / 1.12³) + (64/1.12³)

= $53.94

7 0
3 years ago
WILL MARK BRAINLIEST!!!!!
kolbaska11 [484]

Answer:

selling an investment for more than they paid for it

Hope this helps plz mark me brainliest

7 0
3 years ago
Which of the following can result from inflation in the United States?
Semenov [28]

Answer:

b. Investors buy products in other countries.

Explanation:

Inflation causes higher cost of production for manufacturer which then charge high cost for the products. Thus, if there is inflation in US, product cost will skyrocket thus companies will buy products from other countries where the product might be at a cheaper cost.

4 0
2 years ago
Hodor borrowed $1000. The bank charges him 5% interest per year. At the end of year, he paid $50 in interest. There was 2% incre
dem82 [27]

Answer:

5%

Explanation:

nominal interest rate = 5%

real interest rate = nominal interest rate -  increase in GDP deflator (inflation rate) = 5% - 2% = 3%

The nominal interest rate is the interest rate earned or charged without considering the effects of inflation. The real interest rate adjusts the nominal interest rate against the year's inflation rate.

5 0
3 years ago
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