Assignment

The following table shows an abbreviated income statement and balance sheet for McDonald's Corporation for 2012.

INCOME STATEMENT OF MCDONALD’S CORP., 2012
(Figures in $ millions)
Net sales	27,587
Costs	17,589
Depreciation	1,422

Earnings before interest and taxes (EBIT)	8,576
Interest expense	537

Pretax income	8,039
Taxes	2,654

Net income	5,385

BALANCE SHEET OF MCDONALD’S CORP., 2012
(Figures in $ millions)
Assets	2012		2011	Liabilities and Shareholders' equity	2012	2011
Current assets							Current liabilities
Cash and marketable securities		2,356			2,356		Debt due for repayment	—	427
Receivables		1,395			1,355		Accounts payable	3,423	3,163

Inventories		142			137		Total current liabilities	3,423	3,590
Other current assets		1,109			636

Total current assets		5,002			4,484
Fixed assets							Long-term debt	13,653	12,154
Property, plant, and equipment		24,697			22,855		Other long-term liabilities	3,077	2,977

Intangible assets (goodwill)		2,824			2,673		Total liabilities	20,153	18,721
Other long-term assets		3,003			3,119		Total shareholders’ equity	15,373	14,410

Total assets		35,526			33,131		Total liabilities and shareholders’ equity	35,526	33,131

In 2012 McDonald’s had capital expenditures of $3,069.

a.	Calculate McDonald’s free cash flow in 2012. (Enter your answer in millions.)

Free cash flow

$ million

b.	If McDonald’s was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 35% on the revised pretax income.)(Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.)

please show all workings for this answer.

question 2

What would be the marginal and average tax rates for a married couple with taxable income of $90,900? For an unmarried taxpayer with the same income? Use Table 3.7.(Do not round intermediate calculations. Enter the marginal tax rates as a whole percent. Enter the average tax rates as a percent rounded to 2 decimal places.)

(please show how you arrive at your answer for this question also)

	Marginal tax rate	Average tax rate
Married couple	%	%
Single person	%	%

Additional tax

$ million

11 years ago

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