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This 2 page Class Notes was uploaded by Tiarra Jensen on Monday September 14, 2015. The Class Notes belongs to FIL 240 at Illinois State University taught by Trefzger in Fall 2015. Since its upload, it has received 110 views. For similar materials see Business Finance in Finance at Illinois State University.
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Date Created: 09/14/15
Fil 240 Business Finance Teacher Joseph Trefzger Note taker Tiarra Jensen tiiens1ilstuedu Week 3 Anything emphasized during class discussion will have a next to it gt This bullet mark will signify any mathematical equations List of what chapters to read topics and homework can be found at his website httpswww5cobilstueduiwtrefzfil240 A calculator is needed for his class but it cannot be a graphing calculator Dav 5 September 1 2015 Wrap up Topic 2 Net working capital Financing terminology 0 working shortterm 0 Capital longterm Shortterm assets paid for with long term money NO PAT EBIT1tax rate 0 Accrual accounting measure 0 Compensate lenders and owners paying income tax gt OCF operating cash ow OCF NOPAT depreciation gt FCF OCF net cash spent on New Investment in assets don t need to worry about this one too much Total Revenue paid to produce and distribute goodsservices Loss in value of long term assets depreciation Operating Income EBIT Gain or Loss on sale of assets Interest paid to lenders Taxable income or earnings before taxes EBT X Corp s Aug inc tax rate based on income level Tax Liability Business Sell for less than bought tax break Sell for some amount as purchased no tax Sell for more than bought need to pay tax Or Sell for amount after depreciation then same situation as above Average rates E Marginal Rates Average Rates What has happened historically Marginal Rates where we are going These rates go hand in hand Example If you re driving on a trip and you get gas at the first stop for 249 and the second stop it cost 250 and the third stop it cost 251 These are average rates Now based on the average rate we can safely assume the next stop will cost 252 this is a marginal rate However if a gasoline crisis happened between stop three and the last stop then it can be safe to assume that gas will increase to 290 which is also a marginal cost You will always need an Average rate to base costs off of to determine marginal rates 1St 20000 is taxed at 10 rate to get a total tax payment of 2000 2nd 20000 is taxed at 15 rate to get a total tax payment of 3000 3rd 20000 is taxed at 20 rate to get a total tax payment of 4000 So based off of table above if a person made 60000 then they would pay a tax of 9000 200030004000 Average tax payment is 900060000 15 This does not mean that they paid 15 tax on every dollar that they paid it s just the average amount In reality they paid 10 15 and 20 If you earned an extra dollar 60001 then you would be taxed 25 on that last dollar Is it worth it to work more or would it be more worth it to be at home with family You need to be able to answer this question You are not making the same amount of money on that dollar as you were making on the first dollar so is it worth it or is it more worth your time to go home We went through the problems for the rest of this class and the next class Problems and answers can be found on his website at httpswww5cobilstueduiwtrefzfil240
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