A long-term debt maturing currently, which is to be paid with cash in a sinking fund b. A long-term debt maturing currently, which is to be retired with proceeds from a new debt issue c. A long-term debt maturing currently, which is to be converted into common stock d. None of these 16) A company borrows $10,000 and signs a 90-day nontrade note payable. In
Applicable Law & Analysis: “Gross income does not include income attributable to the recovery during the taxable year of any amount deducted in any prior taxable year to the extent such amount did not reduce the amount of tax imposed by this chapter.“ (IRC Sec. 111 (a)) Conclusion: The tax issue at play here is how to handle the additional $25,000 received by John Smith from expenses he paid up front. If John previously expensed the $25,000 then the recovery of the $25,000 will be considered as income in the current year. If he didn’t then he may use the $25,000 to offset the deferred expenses and it will have no impact on his taxable income. Issue c) What is your determination regarding reducing the taxable amount of income for both (a) and (b) above?
We got a cost of equity of 20%. Free cash flows are calculated using the formula EBIT x (1-TAX) + Depreciation – Capex – Change in NWC. The results are presented below: The NPV of the first generation phone project, ignoring both the possibility of investing in the second-generation project and the possibility of selling the equipment after two years is ($3,154). Since the NPV is negative, this would not be a good investment. 2.
Which of the following accounts is NOT used with the GROSS method of recording sales? a. Sales Discounts b. Sales c. Accounts Receivable d. Sales Discounts Lost PAGE 2 For the following set of questions, use the information below from the Perry Co. 1995 income statement: Purchases $85,000 Transportation-In 1,200 Inventory, January 1, 1995 16,500 Inventory, December 31, 1995 18,800 Purchase Returns & Allowances 1,400 4. The amount that Perry would report as Cost of Goods Purchased in its 1995 income statement is: a.
cost of equity =I used the 20 year at 5.74%+Geometric mean=5.9%x most recent beta .69=9.81% Cost of Debt I used Yield to maturity to find cost of debt From Exhibit 4 PV= 95.60 N=40 (20years x 2) since its paid semiannually Pmt=-3.375 (6.75/2) FV=-100 Comp I = 3.58% (semiannual) 7.16% (annual) After tax cost of debt = 7.16%(1-38%) = 4.44% E = market value of the firm's equity To find Market value of Equity you multiply share price by amount of shares $42.09x273.3= 11503. D = market value of the firm's debt I valued book value of debt at 1,291 Then divide 11503/(11503+1291)=89.9 so the weight for debt is 10.1 percent When I calculated WACC 4.44%x.101+9.81%x.899= 9.27% Cohen made a few mistakes when she calculated her WACC. First, she used historical data in
Contribution limits Individuals are able to contribute money into their Roth IRA account January of the present tax year through April 15 of the succeeding tax year. If the individual is under 50 years of age, they are allowed to contribute there post tax dollars into their Roth IRA with a limit of $5,000. If the individual has multiple providers, they may contribute part to one provider and the rest to the other, but the maximum that can be provide is still $5,000. If the individual is over the age of 50, $5000 is still their
A tax advantage of business combination can occur when the existing owner of a company sells out and receives: a. cash to defer the taxable gain as a “tax-free reorganization” b. stock to defer the taxable gain as a “tax-free reorganization” c. cash to create a taxable gain d. stock to create a taxable gain 2. Publics Company acquired the net assets of Citizen Company during 20X9. The purchase price was $800,000. On the date of the transaction, Citizen had no long-term investments in marketable equity securities and $400,000 in liabilities. The fair value of Citizen assets on the acquisition date was as follows: |Current assets |$ 800,000 | |Noncurrent assets | 600,000 | | |$1,400,000 | How should Publics account for the $200,000 difference between the fair value of the net assets acquired, $1,000,000, and the cost, $800,000?
They were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $20,000. If Stine uses straight-line depreciation, annual depreciation will be • $3,760. • $4,072.
Both monies pooled together after taxes add together the sum of £1626.56. With outgoings at £1140 and £1625 pooled together there is a difference of £405 which split between the two girls would be a total of £202.50. Using the online household equivalence calculator this compensates Praveena’s loss of income by 37%. Case study 2 Casper is in the process of paying for his holiday which will cost him £2000, he is considering what to do? If Casper decided to take out a loan that charges 20% APR over one year for the amount of £2000 over 12 months he would expect to pay £183 per month for 12 months with interest of £205.
Flood damage losses to property where flooding is rare (not restructuring charges, losses from inventory obsolesce or impairment losses on intangible assets). - The gain or loss from disposal of a component of a business is shown as a (an): part of discontinued operations. - Clair, Inc. reports net income of $700,000. It declares and pays total dividends of $100,000 for the year, one-half of which relate to the preferred shares. The weighted-average number of common shares outstanding during the year is 200,000 shares, and the weighted-average number of preferred shares outstanding during the year is 10,000 shares.