Acct Unit 1 Homework Assignment 06/12/15 Question 1: Brady Brothers, a partnership, has total assets of $350,000 and $100,000 of owners’ equity. What are the partnership’s total liabilities? $350,000 – Liabilities = $100,000 $350,000 - $100,000 = $100,000 - $100,000 Answer: $250,000 = Liabilities Question 2: During the first month of operation, Brady Brothers made sales to customers totaling $12,000 but received only $6,000 from customers in cash. Brady Brothers incurred $8,000 for operating expense but only paid $5,000 in cash for those expenses. What was Brady Brothers cash basis income?
Facts In 1983, GEICO announced plans to purchase several million shares of its outstanding common stock for $60 per share. Among GEICO’s largest stockholders was Berkshire Hathaway, Inc., an investment company. Executives of the two companies decided that Berkshire would tender approximately 350,000 if its GEICO shares in the stock buyback plan, which would allow Berkshire to treat the transaction as a proportionate redemption. In a proportionate redemption, the percentage equity interest of on company in a second company is maintained at the level that existed immediately before the transaction. For federal taxation purposes, the proceeds received by the investor company in a proportionate redemption are taxed as dividends by applying the effective intercorporate dividend tax rate.
https://hwguiders.com/downloads/acct-324-final-exam-solution ACCT 324 Final Exam Solution Question 1. (TCOs 2 & 3) Evelyn sold her personal residence to Drew on March 1 for $300,000. Before the sale, Evelyn paid the real estate taxes of $3,000 for the calendar year. For income tax purposes, the real estate tax deduction is apportioned as follows: $750 to Evelyn and $2,250 to Drew. Drew’s basis in the residence is: Question 2.
Birth of Enron Enron Corporation was created in 1985, after the federal deregulation of natural gas in North America. It was formed by the merger of two natural-gas pipeline companies from Houston and Nebraska. This merger was primarily debt-financed, which meant that Enron started life with a large level of debt. Enron’s first CEO, Kenneth Lay knew that his firm would have to be innovative to survive. McKinsey & Co. was hired to assist in developing Enron’s business strategy.
LLC Corp. Overall tax rate 35% (4)/(1) 44.75% [(2) + (4)]/(1) 58. [LO 3] For the current year, Custom Craft Services Inc. (CCS), a C corporation, reports taxable income of $200,000 before paying salary to Jaron the sole shareholder. Jaron's marginal tax rate on ordinary income is 35 percent and 15 percent on dividend income. Assume CCS's tax rate is 35 percent.
J.P Morgan & Company was advised by Brasil Investimentos to give a statement regarding a sale or restructuring of its subsidiary Paginas Amarelas – the telephone directory business. The responsibility for the valuation of business of Paginas Amarelas was given to Juan Lopez, a new associate of JP Morgan’s Latin America M&A Group who had better understanding of the business markets where they were conducting their businesses.. Juan Lopez estimated the future cash flow (in US$ as requested by the client) of the operations in the three Latin American countries (Argentina, Brazil and Chile) where they were competing. After calculating the future cash flow, Lopez estimated the weighted average cost of capital (WACC) to find out the target rate of return for each country operation through which he determined the DCF value of the three country operation as well. JP Morgan Company was basically a global financial service provider and considered as a major global player in the investment – banking industry. JP Morgan generally made use of three approaches-DCF (Discounted Cash Flow) method, trading multiples and transaction multiples for estimating the valuation of the company.
I. Introduction a. Ben & Jerry’s Homemade was on the table for takeover by other firms; specifically four, Dreyer’s, Unilever, Meadowbrook Lane and Chartwell. With the increased competitive market and declining financial performance, takeover bids were coming in. Co-founders Ben Cohen and Jerry Greenfield knew that in order for B&J to maintain its social stature, it would need to remain an independent company; but chief executive Perry Odak felt that the shareholders would be best served by selling the company. II.
Cost of Capital at Ameritrade CAPM Cost of Capital at Ameritrade ● ● ● Introduction to Case Calculate CAPM Calculate WACC Company Background ● ● Ameritrade is formed in 1971 pioneer in the deep-discount brokerage sector. In Mar 1997, Ameritrade raised $22.5 million in IPO ● Company Background ● - Source of revenue from Transaction and Net interest Business Question Joe Ricketts (CEO) is thinking cut cost, invest in advertise or invest in technology - Expect return 30-50% - Expect return 10-15% ● What type of Ameritrade Business? ● Who are Ameritrade’s Competitors ● ● ● ● E*Trade Waterhouse Investor Service Charles Schwab Quick & Reilly Other Information that we have? ● Ameritrade Annual Income, Balance sheet Capital Market return data Ameritrade & Competitors Stock price Stock return from NYSE ● ● ● What do we need to answer question ● CAPM (Capital Asset Pricing Model) ◦ Risk Free Rate ◦ Beta (unleverage) ◦ Risk Premium ◦ Expected Market Return ● WACC (Weighted Average Cost of Capital) ◦ E/V ratio ◦ Re ◦ Rd ◦ D/V What do we need to answer question ● CAPM (Capital Asset Pricing Model) ● WACC (Weighted Average Cost of Capital) CAPM - Capital Asset Pricing Model Ke = Rf + B (Rm-Rf) ◦ Risk free rate ◦ Beta ◦ Expect Market return ◦ Market risk premium (Rm-Rf) CAPM - Capital Asset Pricing Model Risk free rate We pick up 30-years bonds Rf = 6.61% Why? Ameritrade is going to make a substantial investment in technology Ameritrade’s mission is to be the largest brokerage firm worldwide(Long term investment) CAPM - Capital Asset Pricing Model Market Risk Premium Historic Average Total Annual Returns on US government securities and Common Stocks(Exhibit 3) We consider Ameritrade is a large company - in 1997, Ameritrade(NASDAQ: AMTD) raised 22.5 million in an initial public offering
Woodrow Wilson’s Development in American Business Interest Woodrow Wilson described him self as a conservative, yet did not believe that “government must keep its hands off the workings of the economy” instead he felt government should “legislate to protect workers welfare and to regulate corporations”(9). While at Princeton University, Wilson studied history and political science and envisioned detailed solutions to national problems. While president, he now had the power to solve the issues, which he felt needed reform. During this time the United States was changing into an economic super power, monopolies and trusts were controlling the economy and exploiting workers; there was an obvious need for reform. One of Wilson’s first concerns was to reduce tariffs.
I will also rebuild our economic infrastructure that we have neglected while we spent plenty of time rebuilding other countries. During World War II we were established as an icon of a superpower with developing industry. We once had massed productions and multiple corporations. In the past, presidents have allowed for companies to send their corporations to overseas entity leading our country into a realm where there are no jobs. As a presidential candidate of the United States, I will bring back those companies and re-institute a stronger infrastructure that will make more costly to do business in the United States of America.