The yield to maturity (YTM) on 1-year zero-coupon bonds is 7% and the YTM on 2-year zeros is 8%. The yield to maturity on 2-year-maturity coupon bonds with coupon rates of 10% (paid annually) is 7.5%.

a. What arbitrage opportunity is available for an investment banking firm?

The arbitrage strategy is to buy zeros with face values of $  and $  , and respective maturities of one year and two years.

b. What is the profit on the activity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

The Millard Division's operating data for the past two years are provided below:

Millard Division's margin in Year 2 was 120% of the margin in Year 1.

The net operating income for Year 1 was:

Garrison 16e Rechecks 2017-10-31

Multiple Choice

• $385,200

• $160,500

• $192,600

• $190,000

Last year a company had sales of $370,000, a turnover of 2.1, and a return on investment of 56.7%. The company's net operating income for the year was:

Multiple Choice

• $109,890

• $209,790

• $176,190

• $99,900

3. At the beginning of the year, Poplock began a calendar-year dog boarding business called Griff’s Palace. Poplock bought and placed in service the following assets during the year:

Asset                                 Date Acquired   Cost Basis

Computer equipment      3/23                       $5,000

Dog grooming furniture  5/12                          $7,000

Pickup truck                      9/17                     $10,000

Commercial building       10/11                    $280,000

Land (one acre)                10/11                    $80,000

Assuming Poplock does not elect §179 expensing or bonus depreciation, what is Poplock’s year 1 depreciation expense for each asset?

Calculate the ratios for year 2 that are listed below:

COMPANY XYZ

Income Sheet

COMPANY XYZ

Create your response to this:

Products Inc. is analysing a 5 -year project that produces sales of £100 million per year (in years 1 through 5). Under the assumption that accounts receivable are 10% of current year sales, the project has a positive NPV of £5 million. However, the management is concerned that customers will pay at a slower rate, which will put accounts receivable for the project at 20% of current year sales. The project’s discount rate is 10%. The NPV of the project under this alternative scenario is closest to

a. £1.55 million b. £4 million

c. £2.7 million

d. Not enough information is provided

Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows.

1. Selling and administrative expenses consist of $450,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses.
2. The company's product cost of $20 per unit is computed as follows.

Direct materials $4 per unit

Direct labor $5 per unit

Variable overhead $3 per unit

Fixed overhead ($800,000 / 100,000 units) $8 per unit

1. Prepare an income statement for the company under variable costing.

Select the false statement:

• A. Part-year residency is the year in which residency status changes.
• B. For a part-year resident: for the period of residency, the individual pays tax in Canada on worldwide income. For the period of non-residency, the individual pays tax in Canada on income earned in Canada from employment, carrying on business, and from disposal of taxable Canadian property
• C. A permanent establishment is a “fixed place of business through which the business of a resident of a country is wholly or partly carried on”. It can include a branch or a person who habitually exercises an authority to conclude/negotiate contracts.
• D. Facilities used solely for storage, display, or delivery of goods typically do not meet the definition of a permanent establishment
• E. An individual must always be a resident in at least one country at any given time
• F. A clean break is considered on the latest date of when: the individual leaves Canada, the individual’s immediate family leaves Canada, or the individual loses citizenship in Canada

ABC Company's Accounting year ends on December 31. Equipment was purchased on June 30 of year 1 for $330,000. So, first year depreciation will be based on only 6 months of ownership. The equipment is expected to have a useful life of 5 years, or 15,000 operating hours, and a residual value of $30,000. Compute the depreciation expense for the years of ownership using the unit of production and double declining balance depreciation methods. Actual usage: 4,500 hours first year; 3,250 hours second year; 2,000 hours third year; 1,000 hours fifth year; and 1,00 hours sisth year.

Year 1 (6 months only)

Year 2

Year 3

Year 4

Year 5

Year 6 (6 months only)