Last year Darlington Equipment Company issues a 10-year, 12% coupon bond at its par value of $1000. Interest is paid quarterly. Currently the bond sells for $1,200.

a. What is the bonds yield to maturity?

b. If the bond can be called in 5 years for a redemption price of $1,165, what is the bond's yield to call?

Please show your work :)

For the data below:

(a)           Determine the least squares regression line using Excel.

(b)           Determine the predicted value for 2004.

(c)           Determine the 3 year moving average.

(d)           Determine the MSE for the trend line (in a) and the 3 year moving average (in c.) Which forecasting method is better? Explain.

Lori, who is single, purchased 5-year class property for $200,000 and 7-year class property for $410,000 on May 20, 2017. Lori expects the taxable income derived from her business (without regard to the amount expensed under § 179) to be about $800,000. Lori wants to elect immediate § 179 expensing, but she doesn't know which asset she should expense under § 179. She does not claim any available additional first-year depreciation.

Click here to access Exhibit 8.1 and the depreciation table to use for this problem.

If an amount is zero, enter "0".

a. Determine Lori's total cost recovery deduction if the § 179 expense is first taken with respect to the 5-year class asset.

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Under the modified accelerated cost recovery system (MACRS), the cost of an asset is recovered over a predetermined period that is generally shorter than the useful life of the asset or the period the asset is used to produce income. MACRS provides separate cost recovery tables for realty (real property) and personalty (personal property). Write-offs are not available for land because it does not have a determinable useful life. Cost recovery allowances for real property, other than land, are based on recovery lives specified in the law. Section 179 (Election to Expense Certain Depreciable Business Assets) permits the taxpayer to elect to write off up to part of the acquisition cost of tangible personal property used in a trade or business.

b. Determine Lori's total cost recovery deduction if the § 179 expense is first taken with respect to the 7-year class asset.

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Correct

c. If § 179 expense is first allocated to the seven-year class property, the deduction for the year would be $ larger.

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Correct

For parts d. and e.
Assume a 6% discount rate The present value factors for a 6% discount rate are as follows: Year 1: 1.000, Year 2: 0.9434; Year 3: 0.8900, Year 4: 0.8396, year 5: 0.7921, Year 6: 0.7473, Year 7: 0.7050, Year 8: 0.6651.

Hint: Set up two analysis - on to find present value of tax saving with Section 179, and one without Section 179. Then compare them.

If required, round computations to the nearest dollar.

d. Assume that Lori is in the 25% marginal tax bracket and that she uses § 179 on the 7-year asset.

The present value of the tax savings from the depreciation deductions for both assets $.

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Incorrect

e. Assume that Lori is in the 25% marginal tax bracket and that Lori decides not to use § 179 on either asset.

The present value of the tax savings generated by using the § 179 deduction on the 7-year asset $.

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Incorrect

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Partially correct

Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065 and it sells for $1,200

What is the bond's nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

What is the bond's nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.

Would an investor be more likely to earn the YTM or the YTC?

What is the expected capital gains (or loss) yield for the coming year? Use amounts calculated in above requirements for calculation, if required. Negative value should be indicated by a minus sign. Round your answer to two decimal places.

Smith Family

• Single male
• Paid $900 in alimony last year
• No kids
• Earned $37,500 last year from FT job
• Earned $3,000 from PT job
• Rents an apartment for $600/mth
• Spent $500 on moving expenses for a new job
• Paid $2,400 in federal income taxes through his paychecks
• Paid $700 in interest on a student loan
• Gave $500 to a local for profit soccer team for new uniforms
• Bought a new car with a $2,000 down payment
• Contributed $3,000 to a Roth IRA last year

1. What is the Smith family Gross Income?
2. What is the Smith Family AGI?
3. What would the standard deduction be for the Smith family?
4. What is the total of itemized deductions the Smith family can use?
5. How much of the soccer donation can the Smith family claim?
6. What is the Taxable income for the Smith family?
7. How much will the Smiths owe/get in refund for their tax return?
8. What is the average tax rate for the Smith family?

5 year ago, the bond issuer issued a 30-year 7% semiannual bond when the market interest rate was 6%. 5 years later, the interest rate changes to 8%, so what is the rate of return for this bond for the last 5 years?

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.