Problem 4.25 – EFN at 70-80% Operating Capacity

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Difficulty – Medium

They tell you that the firm is expected to grow, but they are operating at below 100% capacity. Given this, you are provided with an income statement and balance sheet and are asked to determine the EFN.

NOTE: Sometimes they make the assumption that fixed assets are sold, sometimes not. So read that part carefully! To find the tax rate, look at the income statement they provide, next to taxes paid.

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