Question

Calculate residual income. Total assets = $3000,000 financed with twice as much debt as equity pre-tax cost of debt = 6% cost of equity = 10% ebit = $300,000, taxed at 40%

Answer 1

Total liabilities and equity is the sum of all debt and equity, so if we subtract debt from total .... Taxable income = $3,015 / (1 – .40) ... Current assets $973,000 Long-term debt 913,000

Answer 2

Explanation:

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