Questions
Each type of business entity is affected by taxation. However, tax rates vary among the many...

Each type of business entity is affected by taxation. However, tax rates vary among the many different types of company structures, such as traditional C corporations, S Corporations, partnerships, and LLC. For example, corporations are generally taxed at higher tax rates than sole proprietors.

Respond to the following in a minimum of 175 words and citations

If you were going into business and had a choice of business structures to select from that would minimize your taxes, while yielding the highest profits, which would you choose and why?

In: Finance

Consider a project to supply Detroit with 35,000 tons of machine screws annually for automobile production....

Consider a project to supply Detroit with 35,000 tons of machine screws annually for automobile production. You will need an initial $2,900,000 investment in threading equipment to get the project started; the project will last for five years. The accounting department estimates that annual fixed costs will be $495,000 and that variable costs should be $285 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the five-year project life. It also estimates a salvage value of $300,000 after dismantling costs. The marketing department estimates that the automakers will get the contract at a price of $345 per ton. The engineering department estimates you will need an initial net working capital investment of $450,000. You require a 13 percent return and face a marginal tax rate of 38 percent on this project.

*In Excel*

a. What is the estimated operating cash flow for this project?(20 points)

b. What is the NPV? Is the project acceptable?(20 points)

c. Suppose you believe that the accounting department’s initial cost and salvage value projections are accurate only to within +/-15 percent; and the engineering department’s net working capital estimate is accurate only to within +/- 5 percent. What is your worst case scenario for this project? Your best-case scenario? Do you still want to pursuit this project?(30 points)

d. Suppose you are confident with your own projections, but you are a little unsure about Detroit’s actual machine screw requirements. What is the sensitivity of the project OCF to changes in the quantity supplied? What about the sensitivity of NPV to changes in quantity supplied? Given the sensitivity number you calculated, is there some minimum level of output below which you wouldn’t want to operate? Why?(30 points)

In: Finance

For your job as the business reporter for a local​ newspaper, you are given the task...

For your job as the business reporter for a local​ newspaper, you are given the task of putting together a series of articles that explain the power of the time value of money to your readers. Your editor would like you to address several specific questions in addition to demonstrating for the readership the use of time value of money techniques by applying them to several problems. What would be your response to the following memorandum from your​ editor?

​To: Business Reporter

​From: Perry​ White, Editor, Daily Planet

​Re: Upcoming Series on the Importance and Power of the Time Value of Money

In your upcoming series on the time value of​ money, I would like to make sure you cover several specific points. In​ addition, before you begin this​ assignment, I want to make sure we are all reading from the same​ script, as accuracy has always been the cornerstone of the Daily

Planet.

In this​ regard, I'd like a response to the following questions before we​ proceed:

a.  What is the relationship between discounting and​ compounding?

b.  What is the relationship between the​ present-value factor and the annuity​ present-value factor?

c. 1. What will $6,700 invested for 26 years at 6 percent compounded annually grow to?

2. How many years will it take $370 to grow to $2,687.44 if it is invested at 11 percent compounded annually?

3. At what rate would $1,800 have to be invested to grow to $16,243.68 in 18 years?

d. Calculate the future sum of 1,200​, given that it will be held in the bank for 15 years and earn 17 percent compounded semiannually.

e. What is an annuity​ due? How does this differ from an ordinary​ annuity?

f. What is the present value of an ordinary annuity of $2,600 per year for 18 years discounted back to the present at 6 percent? What would be the present value if it were an annuity​ due?

g. What is the future value of an ordinary annuity of $2,600 per year for 18 years compounded at 6 percent? what would be the future value if it were an annuity​ due?

h. You have just borrowed $150,000, and you agree to pay it back over the next 30 years in 30 equal end-of-year payments plus 14% compound interest on the unpaid balance. What will be the size of these payments?

i.  What is the present value of a perpetuity of $1,600 per year discounted back to the present at 18%?

j.  What is the present value of an annuity of $1,900 per year for 10 years, with the first payment occuring at the end of year 10 (that is, ten $1,900 payments occurring at the end of year 10 through year 19), given a discount rate of 16%?

k. Given a discount rate of 9%, what is the percent value of a perpetuity of $1,800 per year if the first payment does not begin until the end of year​ 10?

In: Finance

Project L costs $45,000, its expected cash inflows are $11,000 per year for 12 years, and...

Project L costs $45,000, its expected cash inflows are $11,000 per year for 12 years, and its WACC is 10%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

In: Finance

What should be the margin of safety if the amount of the discount below the fundamental...

What should be the margin of safety if the amount of the discount below the fundamental or intrinsic value? please use your own words and no handwriting, thanks!

In: Finance

Marginal Incorporated (MI) has determined that its before-tax cost of debt is 10.0%. Its cost of...

Marginal Incorporated (MI) has determined that its before-tax cost of debt is 10.0%. Its cost of preferred stock is 11.0%. Its cost of internal equity is 14.0%, and its cost of external equity is 18.0%. Currently, the firm's capital structure has $470 million of debt, $150 million of preferred stock, and $380 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $92 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $358 million?

In: Finance

4. Expected dividends as a basis for stock values The following graph shows the value of...

4. Expected dividends as a basis for stock values

The following graph shows the value of a stock’s dividends over time. The stock’s current dividend is $1.00 per share, and dividends are expected to grow at a constant rate of 2.70% per year. The intrinsic value of a stock should equal the sum of the present value (PV) of all of the dividends that a stock is supposed to pay in the future, but many people find it difficult to imagine adding up an infinite number of dividends.

Calculate the present value (PV) of the dividend paid today (D₀) and the discounted value of the dividends expected to be paid 10, 20, and 50 years from now (D10, D20, D50D10, D20, D50). Assume that the stock’s required return (rss) is 8.40%.

Note: Carry and round the calculations to four decimal places.

Time Period

Dividend’s Expected Future Value

Dividend’s Expected Present Value

Now   
End of Year 10      
End of Year 20      
End of Year 50      

Using the orange curve (square symbols), plot the present value of each of the expected future dividends for years 10, 20, and 50. The resulting curve will illustrate how the PV of a particular dividend payment will decrease depending on how far from today the dividend is expected to be received.

Note: Round each of the discounted values of the dividends to the nearest tenth decimal place before plotting it on the graph. You can mouse over the points in the graph to see their coordinates.

In: Finance

Discuss the actions by the banker/advisor as well as her financial institution(like banker and introducer have...

Discuss the actions by the banker/advisor as well as her financial institution(like banker and introducer have fraud and other misconduct in house loans) by using relevant academic articles/books/reports. Please provide the reference link and use your own word to explain, thank you.

In: Finance

Web Cites Research projects a rate of return of 15% on new projects. Management plans to...

Web Cites Research projects a rate of return of 15% on new projects. Management plans to plow back 20% of all earnings into the firm. Earnings this year will be $4 per share, and investors expect a 8% rate of return on stocks facing the same risks as Web Cites. a. What is the sustainable growth rate? (Enter your answer as a whole percent.) Sustainable growth rate 3 % b. What is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price $ c. What is the present value of growth opportunities (PVGO)? (Do not round intermediate calculations. Round your answer to 2 decimal places.) PVGO $ d. What is the P/E ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio e. What would the price and P/E ratio be if the firm paid out all earnings as dividends? (Round your answers to 2 decimal places.) Price $ P/E ratio

In: Finance

Richard Miyashiro purchased a condominium and obtained a 30-year loan of $190,000 at an annual interest...

Richard Miyashiro purchased a condominium and obtained a 30-year loan of $190,000 at an annual interest rate of 8.45%. (Round your answers to the nearest cent.)

(a) What is the mortgage payment?
(b) What is the total of the payments over the life of the loan?
(c) Find the amount of interest paid on the mortgage loan over the 30 years.

In: Finance

Marcel Thiessen purchased a home for $206,200 and obtained a 15-year, fixed-rate mortgage at 10% after...

Marcel Thiessen purchased a home for $206,200 and obtained a 15-year, fixed-rate mortgage at 10% after paying a down payment of 10%. Of the first month's mortgage payment, how much is interest and how much is applied to the principal? (Round your answer to the nearest cent.)

In: Finance

A pension fund manager is considering three mutual funds. The first is a stock fund, the...

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 3.0%. The probability distribution of the risky funds is as follows:

  

Expected Return Standard Deviation
   Stock fund (S) 12%         41%         
   Bond fund (B) 5         30         

  

The correlation between the fund returns is 0.18.

  

Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the "%" sign in your response.)

  

  Portfolio invested in the stock %
  Portfolio invested in the bond 15.17%
  Expected return 10.94 %
  Standard deviation %

Just need the standard deviation and Portfolio invested in the stock

In: Finance

General Motors GM- Biblical Worldview Include comments regarding Biblical integration on financial stewardship.

General Motors GM- Biblical Worldview

Include comments regarding Biblical integration on financial stewardship.

In: Finance

Please explain conventional and nonconventional cash flows in capital budgeting. Which investment evaluation criteria is the...

Please explain conventional and nonconventional cash flows in capital budgeting.

Which investment evaluation criteria is the best for unconventional cash flows and why?

Provide a example and apply the NPV, IRR, and MIRR methods to your example.

In: Finance

The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital...

The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends.

   

Year Net Income Profitable Capital
Expenditure
1 $18 million $ 7 million
2 16 million 12 million
3 11 million 6 million
4 22 million 7 million
5 20 million 8 million

The Hastings Corporation has 2 million shares outstanding (The following questions are separate from each other).    


a. If the marginal principle of retained earnings is applied, how much in total cash dividends will be paid over the five years? (Enter your answer in millions.)

  

Total cash dividends million

b. If the firm simply uses a payout ratio of 40 percent of net income, how much in total cash dividends will be paid? (Enter your answer in millions and round your answer to 1 decimal place.)
  

Total cash dividends million

c. If the firm pays a 20 percent stock dividend in years 2 through 5, and also pays a cash dividend of $3.40 per share for each of the five years, how much in total dividends will be paid?
  

Total cash dividends

d. Assume the payout ratio in each year is to be 30 percent of net income and the firm will pay a 20 percent stock dividend in years 2 through 5. How much will dividends per share for each year be? (Assume cash dividend is paid after the stock dividend). (Round your answers to 2 decimal places.)

Year Dividends per Share
1
2
3
4
5

In: Finance