(Deferred Income Taxes)

This year, a company has each of the following income statement items:

1. Gross profits on installment sales.
2. Revenues on long-term construction contracts.
3. Estimated costs of product warranty contracts.
4. Premiums on officers’ life insurance policies with the company as beneficiary.

Indicate where deferred income taxes are reported in the financial statements. Specify when deferred income taxes would need to be recognized for each of the items above, and indicate the rationale for such recognition.

Housing supply and demand is an example of the effects supply and demand can have on price elasticity. The most recent housing boom from 2000-2005 was not only a boom in housing prices, but also in-house construction.

Based on your readings, there are a number of factors that determine housing prices. Some are based on economic theories and some are based on more intangible factors. Describe the key economic factors which effect housing prices and how they are determined (Home Guru).

For each of the following situations, select the most appropriate risk financing plan (retention, transfer, or hybrid) for the given organization based on the given loss exposure’s relative frequency and severity.

1. Local Package Delivery experiences frequent physical damage losses to its trucks.
2. National Farm Products wants to protect its poultry operation from the possible financial consequences of an avian flu outbreak.
3. Construction Contractor recognizes that worker injuries are an unfortunate consequence of doing business.

4. Cost of debt versus cost of equity. Because the cost of debt is lower than the cost of equity, firms must increase their use of debt as much as possible to increase the firm’s value. What is your answer to this argument?

Explain and draw total cost, average cost, Marginal cost for decreasing returns to scale.

Capital component weights, cost of debt, cost of preferred stock, and cost of common equity.

Be sure to use 4 decimal places.

Current assets: 3,100

Property, plant and equipment: 3,400

Total assets: 6,500.

Current liablities: 1,500

Long term debt: 1,750

Preferred stock, $100 par: 500

Common stock, no par: 1,250

Retained earnings: 1,500

Total liabilities and equities: 6,500

Growth rate 7.5%

Coupon on new bonds: 7.75%

Corporate tax rate: 25%

Dividend on preferred: 8%

Price of common stock: $24.00

Price of $100 par value preferred: $75.00

Anticipated common dividend: $1.56

Flotation cost on preferred: $4.00

Flotation cost on common: $2.50

How to find the cost of debt, cost of preferred stock, cost of common equity, capital structure, and the weighted average cost of capital for a publicly traded company like Costco or Amazon.

a) What are the similarities and differences between prime cost, product cost and period cost. b) What are the similarities and differences between fixed costs, variable costs.

Discuss the assumptions that are inherent in production setup cost, ordering cost and carrying cost. How valid are they?