The price of a one-year zero-coupon bond is $943.396, the price of a two-year zero is $873.439, and the price of a three-year zero-coupon bond is $793.832. The bonds (each) have a face value of $1,000. Assume annual compounding.

a) Come the yield to maturity (YTM) on the one-year zero, the two-year zero, and the three-year zero.

b) Compute the implied forward rates for year 2 and for year 3.

c) Assume that the expectations hypothesis is correct. Based on your answers to parts a) and b), can you conclude that interest rates are expected to rise? Explain.

d) If the expectations hypothesis is correct, what will the pure yield curve be next year? [In other words, compute the yields on both a one-year zero and a two-year zero in one year from today.] Use the data from your answers to parts a) and b).

Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:

The company has a 40% tax rate, and its WACC is 11%.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

a-What is the project's cash flow for the first year (t = 1)? Round your answer to the nearest dollar.
$

b-If this project would cannibalize other projects by $2.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.
The firm's project's cash flow would now be $ .

c- Ignore part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest dollar.
The firm's project's cash flow would -Select-increasedecreaseItem 3  by $ .

) What is the present value of an ordinary 12-year annuity that pays $1,000 per year when the interest rate is 7%? a. $7,942.70 b. $8,942.71 c. $9,942.72 d. $10,942.56 e. None of the above.

On the first day of the fiscal year, a company issues a $3,200,000, 9%, 10-year bond that pays semiannual interest of $144,000 ($3,200,000 × 9% × ½), receiving cash of $2,649,441.

Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

B. A series of 25 end-of-year deposits beginning with $1135 at the end of year 1 and increasing by $260 per year with a 6% interest rate. What Uniform Series of deposits would result in the same cumulative balance? $

C. John makes 35 end-of-year deposits into a retirement account that returns 5.0.% per year compounded annually. His first deposit is $7500 and he increases the deposits by 8.9% each year. How much will be in the account immediately following the 35th deposit? $

The scenario:

Sean and Jonah are both 20 year old 2nd year students at EWU. They both still live with their parents, 5 houses down from one another in Cheney Washington. They are and have been best friends sense Jona moved to the block in second grade. Sean’s Grandmother has just passed away and the scene takes place at Sean’s family home where they are celebrating his Grandmothers life with a wake. Sean is sitting on the foot of his bed with his door about half open.

Sean: he is slouched over gazing into his coffee cup clutched by both hands, he glances up and notices Jonah at the door then returns to his gaze. “I don't know what to think Jonah, I loved my Grandma. She was always such a bright ray of sunshine in my life. I just feel overwhelmed… I was to young when my Grandpa passed away to remember how I felt. I just feel lost Jonah.”

Jonah: Jonah leans against the door frame, looking at Sean with a soft face and voice. “Man, Sean I’m sorry. Your Grandma truly was a wonderful woman.”

Sean: looking at Jonah with tears in his eyes and a cracking voice. “Thanks Jonah, that means a lot to me. I know she loved you and thought of you as family too. Do you remember that time we went….

Jonah: Excitedly interrupts Sean, smiling. “Hey man did you by chance get those tickets to the game for Jake and I?”

Sean: Making eye contact with Jonah, and showing a confused face. “Wait what are you talking about Jonah? My Grandmother is gone man…”

Jonah: _________________________________________________

Created by: Cody Beaver & Thomas Ghezzi

Discussion Guidelines:

So here's what you are to do. Read and enjoy the different presented scenarios while you search for the scenario you want to respond to:

1. Respond to a scenario by telling us the actual verbal and nonverbal message you will use.

For example, "(1) I will nod my head and look compassionately at Fred and say, 'Yes, if I understand you correctly you're saying that not only do you really disagree with what your boss said but you're angry that he even said it to you."

2. Then label exactly what your utterance was and why it is accurately labeled.

For example, "(2) This is a paraphrase because it is verifying information without using Fred's own words and while including both the emotion and the content of the message."

3. Tell us why you think this is one of the better responses to have chosen as your response.

For example, "(3) I think Fred needed confirmation that I was listening and understanding him at that point in the conversation. I also think that a non-evaluative paraphrase might let him know that I'm ready to hear him tell me more -- to encourage him to keep speaking."

4. THE FINAL TASK -- Respond to one of your colleague's responses and note an additional concept from your readings s/he did with their response but was not mentioned in their analysis. This can be a wonderful thing they did or it could be a "be careful" this could be interpreted negatively type of issue. Be sure you appropriately label the concept, define the concept, and explain how you see it being used in their response.

PLEASE NOTE THAT YOU NEED TO NUMBER YOUR RESPONSES SO I KNOW EXACTLY WHICH OF YOUR RESPONSES YOU ARE CLAIMING TO HAVE FULFILLED WHICH PART OF THE ASSIGNMENT. For an example of this, note that in each example above I have used the number of the step in the assignment that I am referring to.

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.

Note: Take into consideration how Capital losses are treated for C corporations. Notice how Interest from municipal bonds affect or not your taxable income.

Special deductions may be necessary for dividends.

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.
   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.

IMPORTANT - All information is provided, form 1120 is a tool that might help you solve the problem. The related schedules that are linked to form 1120 are useful as well, but not entirely necessary to solve the exercise. Form 1120 can be found on IRS official site.

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

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

1. Assume that Meganol Company is owned by Thomas as a sole proprietorship. Thomas received $2,400 per month ($28,800 in total) from Meganol Company as an owner’s draw. Additionally, Thomas took $55,000 out of Meganol Company near the end of the year as a partial distribution of profits. (11 points)
   1. Calculate the net business income of Meganol Company/Thomas that would be reported on Schedule C of Thomas Form 1040.
   2. How much of the $2,400 per month ($28,800 total) and the $55,000 distribution would Thomas include as taxable income on his Form 1040?
   3. What amount of Thomas's income will be subject to self-employment tax?
   4. Note that you do not need to complete Schedule C or other forms, but these form will be a useful guide in completing this portion of the assignment.                       

Acme Corporation uses the calendar year as their fiscal year for reporting purposes. Acme Corporation is owned 100% by Jesse Smith.   Jesse Smith is quite wealthy - he has over $3 million in a personal savings account which is currently earning 2 one hundredths of 1% interest (or .0002 rate resulting in $600 per year). He also has many other investments. Acme Corporation has $300,000 of current assets. Acme has Accounts Payable of $40,000 and various Payroll liabilities totaling $109,000. Acme also has a Note Payable in the amount of $800,000. There are no other liabilities. Interest has been paid every year when due on December 31. The Note Payable is due in $200,000 installments on June 30 of each year for the next 4 years. The current interest rate on the note is 4%. However, according to the loan terms, if Acme's current ratio falls below 2, the interest rate will automatically increase to 7%. Since the note is due in installments over the next 4 years, management is presenting the Note on the balance sheet as a long term liability. Is Acme's management reporting their balance sheet appropriately? What recommendations do you have for management? How do these recommendations impact the current ratio?

Selected data pertaining to Lore Co. for the Year 4 calendar year is as follows: Net cash sales $ 3,000 Cost of goods sold 18,000 Inventory at beginning of year 6,000 Purchases 24,000 Accounts receivable at beginning of year 20,000 Accounts receivable at end of year 22,000 What was Lore’s inventory turnover for Year 4?