A company has the capacity to generate a revenue of $3,000,000 a year. The break even revenue is $2,000,000 a year. From the breakeven point every $100 extra revenue generates $40 extra profit and every $100 decrease in revenue results in $40 extra loss. The costs consist of fixed cost , variable costs which are linear related to the revenue. 1-calculate the fix cost 2-calcualte the variable cost at revenue of $1,500,000 a year. The company decides to purchase another machine, which results in an increase of capacity to 4,000,000 a year. The fixed cost of this expansion is 200,000 a year, and the variable costs are 40$ for 100% revenue. The normal revenues is 4,000,000 a year, and the actual revenues is also $4,000,000. 3- calculate the breakeven point after the expansion. 4- calculate the full cost per dollar revenue after the expansion

Calculate the equity value for the following company. EBITDA in year 1 is expected to be $100M and is expected to grow by 1% for each of the next 5 years. Cap Ex, TIs and LCs are expected to be $7M in year 1 and are expected to grow at 3% for each of the next 5 years. Currently the company has $500M in debt and this is expected to remain constant going forward. Assuming an exit in year 6, what is the equity value of the company today? Assume a 10% discount rate and an 8% cap rate.

This year Amber opened a factory to process and package landscape mulch. At the end of the year, Amber’s accountant prepared the following schedule for allocating manufacturing costs to the mulch inventory, but her accountant is unsure of what costs need to be allocated to the inventory under UNICAP rules. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber’s accountant indicated that the business had processed 10,600 bags of mulch but only 2,120 bags remained in the ending inventory.

What is Amber’s tax basis in her ending inventory after applying the UNICAP rules to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.

Marc and Michelle are married and earned salaries this year of $67,600 and $13,350, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $950 from corporate bonds. Marc contributed $2,950 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,950. Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $6,900 of expenditures that qualify as itemized deductions and they had a total of $5,950 in federal income taxes withheld from their paychecks during the course of the year. (Use the tax rate schedules.)

a. What is Marc and Michelle’s gross income?

b. What is Marc and Michelle’s adjusted gross income?

c. What is the total amount of Marc and Michelle’s deductions from AGI?

d. What is Marc and Michelle’s taxable income?

e. What is Marc and Michelle’s taxes payable or refund due for the year?

The budgeting process for a midwestern college resulted in expense forecasts for the coming year (in $ millions) of $9, $10, $11, $12, and $13. Because the actual expenses are unknown, the following respective probabilities are assigned: 0.29, 0.17, 0.25, 0.07, and 0.22.

1. Show the probability distribution for the expense forecast.
   

   x	f(x)
   9
   10
   11
   12
   13

   
   
2. What is the expected value of the expense forecast for the coming year (to 2 decimals)?
   
   
3. What is the variance of the expense forecast for the coming year (to 2 decimals)?
   
   
4. If income projections for the year are estimated at $12 million, how much profit does the college expect to make (report your answer in millions of dollars, to 2 decimals)?

a. The changes in account balances of the Samson Corporation during the year are presented below:

Assets                                        $356,000
Liabilities                                    108,000
Capital stock                               240,000
Additional paid-in capital             24,000

Assuming there are no charges to retained earnings other than for a dividend payment of $52,000, the net income for the year, should be

b. Which of the following is not a discontinued account in the income statement?

c. United Airlines’ 2016 balance sheet reported the following (in millions)

Total Assets                $40,091
Total Liabilities             31,485
Contributed Capital      3,573

What was United Airlines’ total liabilities and stockholders’ equity at December 31, 2016?

For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:

Molly and Mark are wife and husband and earned salaries this year of $12,000 and $64,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Mark and Molly also paid $2,500 of qualifying moving expenses, and Marc paid alimony to a prior spouse in the amount of $1,500. Mark and Molly have a 10-year-old son, Matt, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $1,000 child tax credit for Matt. Mark and Molly paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $5,500 in federal income taxes withheld from their paychecks during the course of the year. What is Molly and Mark’s gross income? What is Molly and Mark’s adjusted gross income? What is the total amount of Molly and Mark’s deductions from AGI? What is Molly and Mark’s taxable income? What is Molly and Mark’s taxes payable or refund due for the year (use the tax rate schedules)? Complete the first two pages of Molly and Mark’s Form 1040 (download forms from the IRS website). 2018 TAX LAW

This year Drake and his son purchased real estate for an investment. The price of the property was $1,200,000, and the title named Drake and his son as joint tenants with the right of survivorship. Drake provided $900,000 of the purchase price and his son provided the remaining $300,000. What is the amount of the taxable gift?

• $300,000.

  Incorrect

• $600,000.

• $285,000.

• $1,200,000.

• None of the choices are correct - Drake did not make a taxable gift.

What is the duration of a 2 year bond that pays a 5% annual coupon with a 9% YTM? Use $1000 as the face value of the bond. Using the duration, what is the expected change in the bond if rates are expected to drop by 25 basis points?