Use Worksheet 9.2. Ben West, a 35-year-old computer programmer, earns $57,000 a year. His monthly take-home pay is $3,000. His wife, Ashley, works part-time at their children's elementary school but receives no benefits. Under state law, Ashley's employer contributes to a workers' compensation insurance fund that would provide $2,050 per month for six months if Ben were disabled and unable to work.

1. Use Worksheet 9.2 to calculate Ben's disability insurance needs assuming that he won't qualify for Medicare under his Social Security benefits. Round your answer to the nearest whole.
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2. Based on your answer in part a, what would you advise Ben about his need for additional disability income insurance? Discuss the type and size of disability income insurance coverage he should consider, including possible provisions he might want to include. What other factors should he take into account if he decides to purchase a policy?
   

- A stock is expected to pay a dividend of $2.25 at the end of the year (i.e., D1 = $2.25), and it should continue to grow at a constant rate of 5% a year. If its required return is 15%, what is the stock's expected price 4 years from today?

- Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:

After-tax operating income [EBIT(1 - T)] for 2020 is expected to be $450 million.
The depreciation expense for 2020 is expected to be $190 million.
The capital expenditures for 2020 are expected to be $225 million.
No change is expected in net operating working capital.
The free cash flow is expected to grow at a constant rate of 6% per year.
The required return on equity is 15%.
The WACC is 12%.
The firm has $206 million of non-operating assets.
The market value of the company's debt is $3.304 billion.
130 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the company's stock price today?

From an accounting perspective, college athletic departments are rarely self-sufficient yet coaches’ salaries increase year-after-year. Apply economic perspectives to explain this seeming dichotomy.

O.P., an unmarried 15-year-old high school student, finds herself pregnant by her 17-year-old boyfriend of several months. She estimates she is 10 weeks pregnant and visits a doctor to ask for an abortion.

O.P.’s parents have made it very clear that they would no longer allow her to live at home and would withdraw all financial support were she to become pregnant before marriage. O.P. has always aspired to attend college and graduate school. Her family knows about her relationship with the young man but they are unaware of its sexual nature. In her country, the law requires parental consent in all health care services for minors under the age of 16 years. It also provides for abortion for any woman upon request, up to 12 weeks of pregnancy. However, the doctor refuses to perform an abortion for O.P. unless one of her parents provides consent for the procedure.

Questions for discussion

What are the medical issues in this case? Specifically:

What are the health risks and benefits of a termination procedure at 10 weeks’ gestation?

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How do these risks change if the procedure is delayed for a further 4–6 weeks?

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What are the health risks if this girl undergoes an unsafe abortion?

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What are the likely health and social outcomes of a pregnancy for this 15-year old?

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How does the law in the United States recognize the principles of evolving capacity or best interest of the child as it applies to medical care?

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How do your responses to the above questions guide your support of O.P.’s decision-making authority free from parental consent?

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What is autonomy?

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What are ethics?

Given the following:

Investor purchased futures contracts on Argentine Peso representing 1,000,000 pesos.

Determine the total dollar amount of profit (loss) from this futures contract based on expectation Argentine peso will be worth $0.41 in one year.

Your firm has recently issued some fixed rate debt but would prefer to re-structure the debt using an interest rate swap to a floating rate of debt because your firm believes rates will be trending downward over the next several years. Listed below are the details for the existing debt and the desired floating debt:

After executing the interest rate swap determine the rate your firm expects to pay on its debt over the next 3 years.

Project Information for firm ABC:

Will export product to Mexico and is looking for firm to swap pesos with over life of project

Time period of project is 4 years

After tax cash flow expected to be 1,000,000 pesos

Peso’s spot rate is $0.20

Risk free annual interest rates: U.S. 6 percent, Mexico 11 percent

Interest rate parity exists

Use one year one year forward rate as predictor of exchange rate in one year

Exchange rates will change by same percentage predicted for year one in years 2 through 4

Firm XYZ will take the 1,000,000 pesos each year at an exchange rate of $0.17 per peso

Ignore taxes

ABCs details:

ABC will use its cost of capital as required return on project

Determine the NPV if ABC enters into a swap agreement with XYZ and does not hedge its position.

1a/ Monash International Co., an Australian multinational company, forecasts 62 million Australian dollars (A$) earnings next year (i.e., year-one). It expects 58 million Chinese yuan (CNY), 47 million Indian rupees (INR) and 40 million Malaysian ringgit (MYR) proceeds of its three subsidiaries in year-one. It also forecasts the year-one exchange rates A$0.2601/CNY, A$0.0360/INR and A$0.5945/MYR.

Calculate the total Australian dollar (A$) cash flow for year-one. (enter the whole number with no sign or symbol)

1b/ Monash International anticipates a 4.62 per cent increase in the year-one income of its subsidiaries in year-two. It has information that the current 4.88 per cent, 7.83 per cent, 13.78 per cent and 10.06 per cent nominal interest rate in Australia, China, India and Malaysia, respectively, will remain the same in the next three years. Due to foreign currency higher nominal interest rate, subsidiaries will invest 25 per cent, 51 per cent and 39 per cent of their year-two earnings in China, India and Malaysia, respectively, for next year. Subsidiaries will remit their remaining incomes (i.e., after investment) to the Australian parent. Monash International believes in the International Fisher Effects with considering a 2.48 per cent real interest in Australia, China, India and Malaysia to calculate the expected foreign currency value against the Australian dollar for year-two based on the year-one exchange rates A$/CNY, A$/INR, and A$/MYR.

What is the total Australian dollar (A$) cash flow for year-two? (enter the whole number with no sign or symbol)

1c/ In year-three, Monash International has a plan to expand the business in China, India and Malaysia. Consequently, it forecasts an 8.50 per cent increase in year-one earnings of its subsidiaries in year-three. Monash International anticipates 3.44 per cent, 7.20 per cent, 11.64 per cent and 9.16 per cent inflation in Australia, China, Indian and Malaysia, respectively, in year-three. It considers the Purchasing power parity to calculate the value of CNY, INR and MYR against the Australian dollar in year-three using the year-two exchange rates A$/CNY, A$/INR, and A$/MYR.

What is the total Australian dollar (A$) cash flow for year-three? (enter the whole number with no sign or symbol)

1d/ The subsidiaries of Monash International remit their earnings and investment proceeds to the Australian parent at the end of each year. The annual weighted average cost of capital or required rate of return of Monash International is 6.01 per cent.

Calculate the current value of the Monash International Co. using its expected cash flows in year-one, year-two and year-three. (enter the whole number with no sign or symbol).

1. Why do 70 year-olds need to eat a more nutrient-dense diet than 20 year-olds?

2. Why can limited mobility decrease nutrient intake?

Grace is your best friend's 20-year-old daughter. Grace has a one-year-old child. You know that Grace lived at home and was a full-time student until she quit college at the end of September of the tax year. Your friend (Grace's mom) gives you Grace's tax documents and tells you to let Grace claim herself and claim her child for EITC. To meet the EITC due diligence knowledge requirement, you:

Cannot ignore the facts about Grace living with her mother for nine months of the year when she was a full-time student.

Can disregard information obtained through a personal relationship.

Cannot complete Grace's return under any circumstances.

Can complete Grace's return filing her as a single nondependent, with EITC for her child.