BUS 312 Lecture Notes - Lecture 2: Growth Capital, Financial Statement, Income Statement
6 Apr 2019
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Assignment 2: the following information is available on the financial accounts of abc corporation. You can presume that depreciation for tax and for financial statement purposes is the same, and therefore, there is no deferred income tax or future income tax liability in this problem. Abc repaid some of their short-term debt at year-end 2003. Therefore, abc"s interest expense for 2003 is the interest rate on short-term debt times short-term debt at the beginning of 2003 (end of 2002). The interest rate on abc"s short-term debt is 8% per annum. Abc paid dividends to shareholders of during 2003. For the year 2003, abc"s rate of return on invested capital, after tax and after depreciation, using beginning of period invested capital, was 20%. During the year 2003, abc sold new shares to new shareholders in the amount of (no shares were repurchased).
