Cole Furnaces
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The solution discusses Cole furniture's EBIT.
Last year Cole Furnaces had $5,000,000 in operating income (EBIT). The company had a net depreciation expense of $1,000,000 and an interest expense of $1,000,000; its corporate tax rate was 40%. The company has $14,000,000 in operating current assets and $4,000,000 in operating current liabilities; it has $15,000,000 in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole's only noncash item was depreciation.
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This solution is comprised of a detailed explanation to answer what was the company's net income for the year.
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Last year Cole Furnaces had $5,000,000 in operating income (EBIT). The company had a net depreciation expense of $1,000,000 and an interest expense of $1,000,000; its corporate tax rate was 40%. The company has $14,000,000 in operating current assets and $4,000,000 in operating current liabilities; it has $15,000,000 in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole's only noncash ...
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