(Taxable income from Australian and foreign sources)

Yvette Jankic, a resident single taxpayer aged 31, worked in New Zealand from 1 July 2017 until 15 November 2017 and has provided the following information for the 2017/18 tax year:

Note – Yvette does not have private health insurance.  

1. Calculate Yvette’s taxable income for the 2017/18 tax year.
2. Calculate Yvette’s net tax payable or refundable for the 2017/18 tax year.

Problem #1

A. Linus, who has AGI of $96,500, owns stock Schultz Corporation with a basis of $32,500. He donates the stock to a qualified charitable organization on December 11, 2017. What is the amount of Linus’ charitable contribution deduction on his 2017 Schedule A, assuming that he purchases the stock on May 30, 2017, and the stock had a fair market value of $34,275 when he made the donation, and assuming that he makes no charitable contribution elections?

B. Assume the same facts as in A., except that Linus purchased the stock on May 30, 2010. What is the amount of Linus’ charitable contribution deduction reported on his 2017 Schedule A, assuming he makes no charitable deduction reported on this 2017 Schedule A, assuming he makes no charitable contribution elections?

C. Lucy, who has AGI of $125,000, contributes a Picasso painting, for which she paid $22,000, to the United Way, a qualified charitable organization. She has owned the painting for several years and it now has a value of $46,000 at the of the contribution. The United Way sells the painting immediately for $50,000 and informs reported on her 2017 Schedule A, assuming she makes no charitable contribution elections?

Here are book and market-value balance sheets of the United Frypan Company:

Assume that MM’s theory holds except for taxes. There is no growth, and the $60 of debt is expected to be permanent. Assume a 36% corporate tax rate.

a. How much of the firm's market value is accounted for by the debt-generated tax shield?

b. What is United Frypan’s after-tax WACC if r_Debt = 6.1% and r_Equity = 16.9%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, other things equal? Assume a borrowing rate of 6.1%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

United Rentals Corporation is authorized to issue 100,000 shares of 5%, $60 par value preferred stock and 5,000,000 shares of no-par common stock with a stated value of $3 per share. During 2018, its first year of operation, the company has the following transactions.    

    Jan. 1 Issued 15,000 shares of preferred stock for cash at $106 per share.    

    Jan. 15 Issued 500,000 shares of common stock for cash at $8 per share.    

    Mar. 2 Issued 20,000 shares of common stock for land. The land had an

              asking price of $300,000. The stock is currently selling

              on a national exchange at $14 per share.

    Apr. 30 Issued 4,000 shares of common stock to attorneys in payment of

              their bill for $50,000 for legal services rendered in helping the

              company incorporate.

    Sept. 5 Purchased 10,000 shares of its own common stock at

              $15 per share.    

    Dec. 6 Sold 8,000 shares of the treasury stock at $16 per share.

    Dec. 10 Sold the remaining treasury stock for $14 per share.    

     INSTRUCTIONS

     Journalize the transactions for United Rentals Corporation.

Here are book- and market-value balance sheets of the United Frypan Company:

Assume that MM’s theory holds except for taxes. There is no growth, and the $80 of debt is expected to be permanent. Assume a 32% corporate tax rate.

a. How much of the firm's market value is accounted for by the debt-generated tax shield?

b. What is United Frypan’s after-tax WACC if r_Debt = 6.5% and r_Equity = 16.5%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, other things equal? Assume a borrowing rate of 6.5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Rewrite the following sentences to make them concise:

1. The pamphlet on health insurance options was published for the purpose of explaining in detail the benefits.

2. This is to let you know that there will be a 10 percent increase in automobile insurance premiums effective immediately.

3. After the storm, needless to say, there were hundreds of claims by homeowners.

4. As you can imagine, the injured motorist, no doubt, will sue the other driver.

5. As it turned out, it was decided that the firm will offer its employers a life insurance policy.

6. In the event that you would like to increase your liability insurance, feel free to give me a call.

7. The final completion of the study showed that auto insurance rates were on the increase because of fraudulent claims.

8. We are happy to say, you will receive a gift free of charge if you attend our seminar to be held at the Americana Hotel.

9. There is no doubt, in my opinion, that there should be a federally-funded insurance program for catastrophic disasters.

10. In order to answer your questions about our upcoming event, it is of utmost importance that you read the information that we sent a few weeks ago, as long as you still have it.

Leona Case Study

Leona is 52 years old and smokes. She is also overweight and has atherosclerosis. When she was given a 2-week vacation from work, she packed up her bags and flew from Minnesota to Sydney, Australia, for the trip she always wanted to take. Unfortunately, just 3 days after she arrived, she was hospitalized when her left calf became inflamed, causing her considerable pain. The physician attending to her told her she developed a deep vein thrombosis.

Student Name:

1.Explain, using your knowledge of hypercoagulability, why the trip to Australia contributed to Leona’s DVT? Why was Leona already at risk for thrombus development?

2.How does Leona’s atherosclerosis affect platelet function? Conversely, what is the effect of increased platelet activity on the development of atherosclerosis?

3.How do atherosclerosis and immobility promote changes in blood coagulation?

4.When Leona was in hospital, she received heparin therapy. Explain why this course of action was taken to treat her DVT. Why was she not given heparin tablets to take back to the hotel with her?

You are working as an assistant to your cousin, who is an architect. She is currently designing the lobby for a new luxury hotel. The lobby will include a walkway suspended above the main level. Her design will include the following features. Above the walkway, attached at various points along its length, will be vertical steel cables of diameter 1.27 cm and unstressed length 5.45 m. These cables will run upward from the walkway and be attached to a rigid beam in the internal structure of the lobby. Below each point of attachment of a vertical cable will be an aluminum column on which the walkway rests. Each column is a hollow cylinder of inner diameter 16.24 cm and outer diameter 16.34 cm. Before the walkway is installed, the columns will extend 3.25 m from the floor of the lobby to the height at which the bottom of the walkway will lie. Suppose the walkway and any individuals walking on it exert a downward force of magnitude F = 9,400 N on a particular attachment point to a cable above and the corresponding column below. Before committing to this design, your cousin asks you to determine how far the point of attachment of the walkway will move downward under these load conditions.

1) Roberto​ Inc. operates a chain of luxury hotels in the​ Asia-Pacific region. It charges​ $540 for a one night stay. However when​ 90% of the rooms are​ occupied, Roberto charges a premium of​ 20% on room tariff for the remaining rooms. What pricing method has Roberto Inc. ​adopted? Explain your answer.

2) Due to a recent downturn in the economy, sales of luxury hotel rooms have been on a steady decline for the last 12 months. A market research study conducted revealed that Roberto Inc. can only sell one night stays for $440. Accordingly, Roberto Inc. has decided to revise its sales price per one night stay to $440. The annual target volume after the price revision is 240 one night stays. Roberto Inc. wants to earn 40% on its sales amount. Calculate the target cost per unit. Show your workings.

3) Roberto Inc.’s revised target price of $440 was based on market research. Explain other methods that could be used when estimating a target price.

1. To economists, which of the following is true of pollution?

A. It is an externality.

B. It is always produced by third parties.

C. It is never caused by the consumers of the good, only by the producers.

D. It is never caused by the producers of the good, only by the consumers.

2.The free-rider problem is most likely to occur in which of the following cases?

A. A lighthouse

B. Buying apples at a farmers’ market

C. Visits to a local theme park

D. Visits to the emergency room

3. The term exclusion refers to which of the following?

A. The likelihood that the government may exclude the private sector from the production of certain goods

B. The possibility that you may receive benefits without having paid for them

C. The condition where you can’t consume a good if you don’t pay for it

D. The condition where your consumption of a good removes that good from someone else

4. Which of the following is a basic difference between public goods and private goods?

A. A private good is an internal good.

B. A public good must have no cost.

C. Public goods have the property of exclusion.

D. Private goods have the property of exclusion.