Assume these are the stock market and Treasury bill returns for a 5-year period:

Required:

a. What was the risk premium on common stock in each year?

b. What was the average risk premium?

c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)

Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations. Sunshine Company had the following income, expense, and loss items for the current year:

Furthermore, Sunshine’s liabilities (all recourse) increased from $0 on 1/1 to $300,000 on 12/31 of the current year.

1. Assume that Sunshine Company is a c corporation. Alvin contributed $60,000 to purchase 60% of the stock while his wife’s best friend, Ann, contributed $40,000 to purchase the remaining 40% of the stock when the corporation was formed this year. Alvin received a $2,400 per month salary ($28,800 in total). Ann doesn’t work for the company so she received no salary. The company distributed some profits at the end of the year by paying out a $55,000 dividend. (11 points)
   1. Calculate Sunshine Corporation’s taxable income and income tax liability to be reported on Form 1120.
   2. What amount and type of income must Alvin report on his individual Form 1040 tax return?
   3. What amount of Alvin’s income will be subject to self-employment tax?
   4. What is Alvin’s basis in his Sunshine stock at the end of this year?

Note that you do not need to complete Form 1120 but this form and related schedules will be a useful guide in completing this portion of the assignment

Assume an economy where

• One period is one year

• The one year short term interest rate from time n to time n + 1 is rn.

• The rate evolves via a stochastic process: r0 = 0.02 rn+1 = Xrn
˜ P[X = 2k] = 1/3
for k ∈{−1,0,1}.
(1)
• Consider now a zero-coupon bond that matures in 3−years with common face and redemption value F = 100.

• Compute B0, the value of this zero-coupon bond.

• Also compute European Call Options on this bond that expire in

(a) 3 years with strike K = 97.

(b) 1 year with strike K = 97.

• Finally, compute American Put Options on this bond that expire in

(a) 3 years with strike K = 97.

(b) 1 year with strike K = 97.

I need detailed process please. Just picture I can't get it.

1. You are expecting to receive the following payments: $2,000 in year 4, $8,000 in year 8. What is the present value of the two payments today, if the interest rate is 5%?

2. Assume you wish to accumulate $100,000 in year 8. You plan to deposit $20,000 today in a bank that guarantees an interest rate of 12%. What additional amount will you have to put in year 5 to achieve this target?

3. You deposited $3,000 in a bank ten years ago. The balance on your account is currently showing $7,102.09. What interest rate did the bank pay on your deposit?

4. You deposit $5,000 in bank today . What is the future value of the sum in year 10 if the interest rate is 6% in years 1-5 and 8% in years 6-10?

an 89 year old woman is living with her 91 year old partner in a very remote rural area of NY. The woman, Laura, seems to be getting confused often and also is experiencing nocturia. Her driver’s license expired on her 87^th birthday and she did not renew it. Her partner’s eyesight has been diminishing rapidly due to glaucoma and he no longer feels comfortable driving. He also has trouble hearing and has to wear hearing aids to assist. One night, Laura is getting up to use the bathroom and she is very confused and ends up falling. Her partner calls 911 but is struggling to communicate bc he does not have his hearing aids on. Answer the following questions: A.) Explain all of the potential obstacles to care that you can see in this example for Laura. B.) Discuss some information or questions a provider might ask and history info that a provider might want to know. C.) You suspect she has a UTI, how could you confirm this?

A generator costs $150 and requires $80 in maintenance for each year of its 3 year life. After 3 years this generator will be replaced by a new one. The generator is straight-line depreciable to zero and has no salvage value. Assume a tax rate of 35 percent and a discount rate of 15 percent. What is the Operating Cash Flow (OCF) per year associated with the generator project?

A generator costs $150 and requires $80 in maintenance for each year of its 3 year life. After 3 years this generator will be replaced by a new one. The generator is straight-line depreciable to zero and has no salvage value. Assume a tax rate of 35 percent and a discount rate of 15 percent. What is the Equivalent Annual Cost (EAC) of the generator?

The federal government calculates its budget on a fiscal year that begins each year on October 1 and ends the following September 30. At the beginning of the 2003-2004 fiscal year, the Department of Finance forecast that the federal budget surplus for the fiscal year would be $4.0 billion. The actual budget surplus for the fiscal year was $9.1 billion. Federal expenditures were $1.7 billion less than the Department had forecast, and federal revenue was $1.5 billion more that the Department had forecast. The remainder of the surplus came from lower-than-forecast debt charges. a) Is it likely that the economy grew faster or more slowly during fiscal 2003-2004 than the Department of Finance had expected? Explain your reasoning. b) Suppose that the federal government was committed to balancing the budget each year. What actions of the government would have led to a balanced budget? And what will be the economic consequences? Explain. c) Does the surprise surplus during fiscal 2003-2004 provide any insight into difficulties that might arise in trying to balance the budget every year? Explain.

Use the following table to answer the next question. The base year is 2007.

Compared to the base year, the rate of inflation for the year 2007 is

A labor contract provides a first year (nominal) wage of $50,000 per year, and specifies that the real wage will increase by 4% each year. The CPI is 2.0 in the first year, 2.1 in the second year, and 2.15 in the third year.

Please enter your answers as numeric responses rounded to the nearest dollar (ie. 32,900 or $32,900 not 32,900.00 or "Thirty-two thousand nine hundred dollars").

What is the real wage for the first year of this contract?

What is the real wage for the second year of this contract?

What is the real wage for the third year of this contract?

What is the nominal wage for the second year of this contract?

What is the nominal wage for the third year of this contract?