Spreadsheet Exercise: Chapter 2

Hemingway Corporation is considering expanding its operations to boost its income, but before making a final decision, it has asked you to calculate the corporate tax consequences of its decision. Currently, Hemingway generates before-tax yearly income of $200,000 and has no debt outstanding. Expanding operations would allow Hemingway to increase before-tax yearly income to $350,000. Hemingway can use either cash reserves or debt to finance its expansion. If Hemingway uses debt, it will have yearly interest expense of $70,000.

To Do Create a spreadsheet to conduct a tax analysis for Hemingway Corporation and determine the following:

a. What is Hemingway’s current annual corporate tax liability?

b. What is Hemingway’s current average tax rate?

c. If Hemingway finances its expansion using cash reserves, what will be its new corporate tax liability and average tax rate?

d. If Hemingway finances its expansion using debt, what will be its new corporate tax liability and average tax rate?

e. What would you recommend that the firm do? Why?

Solution Tax calculation Range of taxable income Base tax + Marginal tax rate × amount over base $- to $50,000 $- + 15% × amount over $- 50,000 to 75,000 7,500 + 25% × amount over 50,000 75,000 to 100,000 13,750 + 34% × amount over 75,000 100,000 to 335,000 22,250 + 39% × amount over 100,000 335,000 to 10,000,000 113,900 + 34% × amount over 335,000 10,000,000 to 15,000,000 3,400,000 + 35% × amount over 10,000,000 15,000,000 to 18,333,333 5,150,000 + 38% × amount over 15,000,000 over 18,333,333 18,333,333 + 35% × amount over 18,333,333

a. What is Hemingway’s current annual corporate tax liability? Current tax liability is found using the corporate tax rate schedule: Before-tax income: $200,000 Before-tax income of first: $100,000 Before-tax income of balance: $100,000 Tax liability first $100,000: $22,250 Tax liability balance: Total tax liability:

b. What is Hemingway’s current average tax rate? Current average tax rate:

c. If Hemingway finances its expansion using cash reserves, what will be its new corporate tax liability and average tax rate?

Using the cash reserves, the new tax liability and average tax rate is found below using the corporate tax rate schedule: Before-tax income: $350,000 Before-tax income of first: $335,000 Before-tax income of balance: $15,000 Tax liability first $335,000: $113,900 Tax liability balance: Total tax liability: Average tax rate:

d. If Hemingway finances its expansion using debt, what will be its new corporate tax liability and average tax rate? With debt, the new tax liability and average tax rate is found below using the corporate tax rate schedule: Income before interest and taxes: $350,000 Less: Interest expense: $70,000 Taxable income: Before-tax income of first: $100,000 Before-tax income of balance: $-100,000 Tax liability first $100,000: $22,250 Tax liability balance: Total tax liability: Average tax rate:

e. What would you recommend that the firm do? Why? Y

ou should consider the after-tax income from each possibility shown below, and you should recommend choice with the highest after-tax income.

1. Current after-tax income:

2. Expansion with cash reserve after-tax income:

3. Expansion with debt after-tax income: Y

ou should recommend option number because it has the after-tax income.

Requirements Points 1 In cell F31, by using cell references, calculate the tax liability for the balance taxable income. 1 2 In cell F32, by using cell references, calculate the total tax liability. 1 3 In cell F37, by using cell references, calculate the current average tax rate. 1 4 In cell F46, by using cell references, calculate the tax liability for the balance taxable income. 1 5 In cell F47, by using cell references, calculate the total tax liability. 1 6 In cell F48, by using cell references, calculate the average tax rate. 1 7 In cell F55, by using cell references, calculate the taxable income. 1 8 In cell F59, by using cell references, calculate the tax liability for the balance taxable income. 1 9 In cell F60, by using cell references, calculate the total tax liability. 1 10 In cell F61, by using cell references, calculate the average tax rate. 1 11 In cell H67, by using cell references, calculate the current after-tax income. 1 12 In cell H68, by using cell references, calculate the after-tax income for the expansion with cash reserve. 1 13 In cell H69, by using cell references, calculate the after-tax income for the expansion with debt. 1 14 In cell G71, type either 1, 2 or 3 depending on the option that you would recommend. 1 15 In cell J71, type either lowest or highest depending on the reason for recommending the option of the previous question. 1 16 Save the workbook. Close the workbook and then exit Excel. Submit the workbook as directed.

Sharon parked her automobile in a parking lot owned by the Parking Corporation. At the request of the parking lot attendant, she left her keys at the attendant's office and received a numbered ticket as her receipt for the payment of the parking fee. The ticket had the following words written on the back: “Rental of space only. Not responsible for loss or damage to car or contents however caused.” A 50 cm. Square sign on the side of the attendant’s office contained a similar message. Before leaving her keys with the attendant, she made certain that the doors of the vehicle were securely locked, as she had left a box containing her camcorder and computer in the trunk of the car. Sharon was not aware that the attendant closed his ticket booth at midnight, at which time he delivered the keys to the cars on the lot to the attendant of the parking lot across the street. The adjacent lot was also owned by the Corporation, but it remained open until 2 a.m. Sharon returned to the parking lot to retrieve her automobile shortly after midnight, at which time she discovered no attendant in charge, and her vehicle missing. By chance, she noticed an attendant on duty at the parking lot across the street, and reported the missing vehicle to him, only to find the attendant in possession of her keys. The police discovered Sharon’s automobile a few days later in another part of the city. The vehicle had been damaged and stripped of its contents, including her camcorder and computer. Sharon brought an action against the Parking Corporation for her loss.

Question : Identify the issues in this case and prepare the arguments that Sharon and the Parking Corporation might use in their respective claim and defence.

Catastrophe Bond

A) What is the origin of catastrophe bonds?

B) How has the issuance of catastrophe bonds changed since 2010? What is driving that

change?

C) What activities does the SPV perform for a catastrophe bond?

Use reliable online resources to research Dodd–Frank Wall Street Reform and Consumer Protection Act, 2010 write a comment about each provision of this comprehensive Financial Reform that relates to real estate activities.

What are some current trends in the labor market?What are the current unemployment rate trends?Describe the changes in percentage terms and relate the changes in employment to the growth of the U.S. economy between the two years of 2010 and 2017.

• Between 2000 - 2010:
• What are the main goods and services the United States traded internationally?
• What trade barriers were in place during that decade?
• What are two pros and two cons of the trade barriers used?

Plan B is the common name in the United States and Canada for the emergency contraception drug levonorgestrel. The high dose of progestogen it delivers has been shown in the lab to inhibit ovulation, thus rendering fertilization impossible. Some groups, however, are concerned that if the drug interfered with the fertilized egg, it could be considered abortive rather than strictly contraceptive. Researchers enrolled a cohort of fertile women attending a family planning clinic for emergency contraception after unprotected intercourse during their fertile period. From interviews, blood samples, and ultrasounds, the researchers were able to establish the time of intercourse relative to the women's menstrual cycles. In this cohort, 8787 women had unprotected intercourse before ovulation (pre‑ovulation group) and 3535 women had unprotected intercourse on or after ovulation (post‑ovulation group). Based on standard clinical assessments of fertility rates by day of the menstrual cycle, the researchers expected 13.313.3 pregnancies in the pre‑ovulation group and 7.07.0 pregnancies in the post‑ovulation group. Instead, they observed 00 and 66 pregnancies, respectively.

(a) We want to know if there is evidence that Plan B impacts the chance of pregnancy when taken before ovulation. What are the observed and expected counts of pregnancy and no pregnancy in the pre‑ovulation group? (Enter your answers rounded to one decimal place.)

Pregnancyobserved=Pregnancyobserved=

Pregnancyexpected=Pregnancyexpected=

No pregnancyobserved=No pregnancyobserved=

No pregnancyexpected=No pregnancyexpected=

Use these counts to compute the chi‑square statistic. (Enter your answer rounded to two decimal places.)

?2=χ2=

Select the correct response to whether or not the test assumptions met.

The expected counts are not large enough, so the test assumptions are not met.

A cohort can be considered a random sample and the expected counts are large enough, so the test assumptions are met.

A cohort cannot be considered a random sample, so the test assumptions are not met.

Neither the cohort can be considered a random sample nor the expected counts are large enough, so the test assumptions are not met.

Calculate the degrees of freedom. (Enter your answer as a whole number.)

df=df=

Find the ?P‑value. (Enter your answer rounded to six decimal places.)

?P‑value ==

Select the correct conclusion.

None of the options are correct.

There is very strong evidence that Plan B impacts the chance of pregnancy when taken before ovulation.

The study found weak evidence that Plan B impacts the chance of pregnancy when taken before ovulation.

The study failed to find evidence that Plan B impacts the chance of pregnancy when taken before ovulation.

(b) We want to know if there is evidence that plan B impacts the chance of pregnancy when taken after ovulation. What are the observed and expected counts of pregnancy and no pregnancy in the post‑ovulation group? (Enter your answer rounded to one decimal place.)

Pregnancyobserved=Pregnancyobserved=

Pregnancyexpected=Pregnancyexpected=

No pregnancyobserved=No pregnancyobserved=

No pregnancyexpected=No pregnancyexpected=

Use these counts to compute the chi‑square statistic. (Enter your answer rounded to two decimal places.)

?2=χ2=

Select the correct response to whether or not the test assumptions met.

A cohort can be considered a random sample and the expected counts are large enough, so the test assumptions are met.

Neither the cohort can be considered a random sample nor the expected counts are large enough, so the test assumptions are not met.

The expected counts are not large enough, so the test assumptions are not met.

A cohort cannot be considered a random sample, so the test assumptions are not met.

Calculate the degrees of freedom. (Enter your answer as a whole number.)

df=df=

Find the ?P‑value. (Enter your answer rounded to four decimal places.)

?P‑value ==

Select the correct conclusion.

The study failed to find evidence that Plan B impacts the chance of pregnancy when taken after ovulation.

None of the options are correct.

The study found weak evidence that Plan B impacts the chance of pregnancy when taken after ovulation.

There is strong evidence that Plan B impacts the chance of pregnancy when taken after ovulation.

(c) Select the correct description of the study findings and what they suggest about the mechanism of action of the Plan B drug.

There is no evidence that Plan B prevents pregnancy when taken before ovulation or after ovulation. These findings reject the theory that Plan B works by inhibiting ovulation.

There is very strong evidence that Plan B prevents pregnancy when taken after ovulation but not when taken before ovulation. These findings support the theory that Plan B works by inhibiting ovulation.

There is weak evidence that Plan B prevents pregnancy when taken before ovulation but not when taken after ovulation. These findings support the theory that Plan B works by inhibiting ovulation.

There is very strong evidence that Plan B prevents pregnancy when taken before ovulation but not when taken after ovulation. These findings support the theory that Plan B works by inhibiting ovulation.

A 2010 study asserts that the number of hours that the average college student studies each week has been steadily dropping (The Boston Globe, July 4, 2010). In fact, the researchers state that, in the U.S., today’s undergraduates study an average of 14 hours per week. Suppose an administrator at a local university wants to show that the average study time of students at his university differs from the national average. He takes a random sample of 35 students at is university and finds that the average number of hours spent studying per week is 16.3. Assume that the population standard deviation is 7.2 hours. At 0.05 level of significance, what is the test statistics for testing the hypotheses H0: µ = 14 versus H1: µ ≠ 14?

Long-lived assets

Make necessary journal entries

1. On Jan 1, 2010 Hampton purchased equipment at a cost of $400,000! installation cost is $20,000. The equipment has a 10 year life and an expected salvage value at the end of 10 yrs. of 20,000

2. On Dec 31, 2010 Hampton determined that the fair value of the equipment was 390,000. No impairment loss is incurred.

3. On Jan 1st, 2011 Hampton revised the useful life of the computers to a total of 14 years to replace the original assumption of 10 years and the salvage value to $30,000

4. On Dec 31,2011 Hampton determined that the fair value of the equipment was $320,000 and an impairment loss is incurred.

5. On March 31, 2012 Hampton sold the equipment for $320,000