Derek currently has $10,773.00 in an account that pays 5.00%. He will withdraw $5,493.00 every other year beginning next year until he has taken 6.00 withdrawals. He will deposit $10773.0 every other year beginning two years from today until he has made 6.0 deposits. How much will be in the account 29.00 years from today?

Please explain steps in detail, thanks!

• Give an example of a situation where a building contractor may want to use the discounted cash flow (DCF) analysis method.
• Discuss a situation where a method to determine a project’s valuation, other than discounted cash flow (DCF) analysis, would be favorable.

Discuss the statement, "Good budgeting is essential".

Suppose the IRS imposes a 20% tax on profits. Return to the original situation (200 pairs, 80 price per pair sold, 60 operating cost per pair).

-How much tax is paid?

-What are “Before-Tax Profits,” After-Tax Profits” and “After-Tax ROE?”

-Similar to the in-class example, what are the percentage changes in revenue, taxes, before- and after-tax profits due to a ten percent increase in unit sales?

-Say a weakening macro-economy causes shoe sales to decline to 110. What are “Before-Tax Profits,” After-Tax Profits” and “After-Tax ROE?”

Keep sales at 200 pairs. But labor costs (wages, benefits, pensions) jump to 75/pair from 40. Perform the same calculations. Why is this loss making situation qualitatively different from the above?

Balance Sheet Data

               Long-Term Debt               80,000,000

               Preferred Stock                20,000,000

               Common Equity                20,000,000

Number of shares of Common                 1,500,000                         Price per share Common             $42

Number of shares of Preferred                     150,000                               Price per share Preferred            $108

Number of 8% Coupon 25-year Bonds          40,000               Price of 8% 25-year Bonds   $1075

Number of 6% Coupon 15-year Bonds          40,200                           Price of 6% 15-year Bonds   $920

Forecasted Dividend on Common (D₁)             $3.30                           Dividend Rate on Preferred            9.5%

Par Value of Preferred                                           $100                                 Current 10-Year Treasury Yld.        4.3%

Standard Deviation of Stock                                   40%                              Correlation Stock vs. Market 0.50

Standard Deviation of Market                                15%                      Market Risk Premium                    5.0%

Risk Premium of our Stock over our 15-yr Bonds          3.9%        Forecasted Constant Growth             3.0%

Tax Rate                                                                       25%                        Flotation costs on Bonds               1.4%

Flotation costs on Preferred                                   2.4%

1. Calculate the appropriate weights to use for the financing sources. (Hint: Assume that the firm feels their current mix of long-term debt is good and would like to raise capital with the same mix of maturities)
2. Calculate the after-tax cost of debt (hint: You can account for the two bonds by taking a weighted average of their cost or by keeping them separate and putting both into the WACC formula at their individual weights). Note that there are flotation costs of 1.4% on bonds.
3. Calculate the cost of preferred. Note that there are flotation costs of 2.4% on preferred stock.
4. Calculate the cost of common (Hint: Use all three methods and take an average). Note that all common equity will come from internally generated equity (retained earnings) which means no new shares will be issued and no flotation costs incurred.
5. Calculate the WACC
6. Why are firms likely to prefer internally generated equity to issuing new shares of common? Identify and briefly explain two reasons.
7. If my firm had two separate divisions – one relatively low risk and one relatively high risk, how might I apply the WACC to each division?

16. If you deposit $1000 at the end of each of the next 10 years, how much will you have in 20 years if you earn 10% APR compounded annually?A. $41,338B. $40,187C. $42,492D. $43,937E. $42,531

Show Process Please

You are the newly appointed manager of Alpine Ambulatory Surgery Center. Congratulations! One of the first tasks you have is to decide how costs should be allocated from support departments to patient care departments in your organization. You have three support departments: administration, housekeeping, and building maintenance. Administration includes human resources, billing and collection, purchasing and of course, your executive office. Housekeeping includes janitorial services for the entire building and laundry/linen cleaning. Building maintenance includes utilities, repairs/maintenance services. You have four patient care departments: surgery, recovery, laboratory and radiology. Your task for this discussion is the following: Describe which allocation method you would use (direct or step down) and why you would recommend that method. Describe how you would allocate costs from support departments to your patient care departments. Be specific as to the cost drivers you will use for each. Describe at least one potential problem you may have in terms of the perceived fairness of your allocation decisions. What would you do to address that limitation?

The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 141,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost $1,810,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $151,000. Your fixed production costs will be $266,000 per year, and your variable production costs should be $9.50 per carton. You also need an initial investment in net working capital of $131,000. The tax rate is 21 percent and you require a return of 13 percent on your investment. Assume that the price per carton is $16.10.

a. Calculate the project NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b. What is the minimum number of cartons per year that can be supplied and still break even? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

c. What is the highest fixed costs that could be incurred and still break even? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A firm is considering an investment in a new machine with a price of $16.8 million to replace its existing machine. The current machine has a book value of $6.5 million and a market value of $5.2 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.85 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine, it will also need an investment of $360,000 in net working capital. The required return on the investment is 11 percent and the tax rate is 21 percent. The company uses straight-line depreciation.

1. What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89.)

2. What is the IRR of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

3. What is the NPV of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89.)

4. What is the IRR of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. )

What's the role of high yield bonds in the bond market.

how foundations can be used to evade tax. give examples.

A proposed cost-saving device has an installed cost of $695,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $105,000, the marginal tax rate is 25 percent, and the project discount rate is 11 percent. The device has an estimated Year 5 salvage value of $80,000.

What level of pretax cost savings do we require for this project to be profitable? MACRS schedule. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

3) On July 15th, 2013, $800 was invested in an account paying 10% compounded semiannually. Then on July 15, 2017 the money was reinvested in an account paying 8% compounded daily. Determine the balance on October 20, 2017 using the Banker's Rule.

What is the periodic rate if the nominal rate of 12% is compounded monthly?

What is the periodic rate if the nominal rate of 6% is compounded quarterly?

When is the nominal or annual stated rate the same as the effective rate?

[Research Problem 1]

Facts:

Jason is a promising left-handed pitcher for the KIU baseball team. he has been drafted by the Chicago Cups. In 2018, he is offered two separate contracts by the Cubs. The first contract provides that he will be paid $1,000,000 as a bonus in 2018. The second provides that the Cubs will transfer $1,000,000 into a bank account in his name for withdrawal no earlier than 2020. He will also be paid the market rate of interest upon payment of the $1,000,000 in 2020. Laser accepts the second contract.

Tax Issues:

Is the $1,000,000 payable to Laser in 2020 taxable to Loser and, if so, in what year?

Tax Sources:

Memo (Analysis & Conclusion):

Explanation:

[Research Problem 2]

Facts:

Emily has been charged with failure to file her 2017 federal Form 1040. As such, she has come to your office to seek your assistance. She wants to file her 2017 Form 1040 but believes the "reasonable cause" exception should apply. She was under a great deal of stress at work and her in personal life during the 2018 filing season. As a result, Emily developed a sleep disorder which was treated with a combination of pills and counseling.

You prepare Emily 2017 Form 1040. She agrees to pay the tax and related interest but insists the failure-to-pay penalty does not apply as she will ill. She feels she should not be expected to meet the usual deadline for filing since she was ill.

Tax Issues:

Please write letter to Emily explaining whether she will be required to pay the failure-to pay penalties or whether she meets the criteria to be exempted from the penalty. Write memo to the tax files supporting your conclusion.

Tax Sources:

Letter to Emily:

Memo:

[Research Problem 3]

Facts:

Your client, Jackie, has been accused of criminal tax fraud. Jackie dropped out of high school during her freshman year. Over the past several years she received hundreds of thousands of dollars from Sam, an elderly gentleman, in exchange for love and companionship. When Sam died and she was left out of the will, Jackie sued the estate for compensatory payments earned throughout her years of tending to Sam.

Tax Issues:

The government now accuses Jackie of fraud for failing to file income and self-employment tax returns for the open tax years. Please provide any defense Jackie may have against the fraud charges.

Tax Sources:

Tax Analysis and Conclusion: