Which of the following statements is TRUE regarding recapture for listed property under §280F? No depreciation is claimed for the item for the year in which recapture is made. The year following the year of recapture, use the general depreciation system (GDS), unless business use of the item drops to 50% or less. The year following the year of recapture, use the straight-line (SL) method in the general depreciation system (GDS), as long as the business use of the item is 50% or less. The year of the recapture and in all subsequent years of depreciation, use the straight-line (SL) method over the alternative depreciation system (ADS) recovery period. Mark for follow up ________________________________________.

*assume the child will be in college for four years*

(A) It is estimated that 18 years from now college tuition will be $42,000 per year. If your child was born today, how much will you need to put away per year, at the end of each year through your child's 18th birthday, so that no additional payments need to be made after year 18? Assume i = 3%

(B) Assume the same parameters as A, but now assume that after year 18, tuition will increase $1,500 per year.

(C) Check your answer to B above by computing the same figure using a different method.

Joe can purchase one of two annuities.
Annuity 1: A 10 year decreasing annuity immediate with annual payments
of 10, 9, 8, ..., 2, 1.
Annuity 2: A perpetuity immediate with annual payments: the perpetuity
pays 1 in year 1, 2 in year 2, 3 in year 3, ...., 11 in year 11. After year 11, the
payments remain constant at 11.
At an annual e§ective interest rate of i, the present value of Annuity 2 is
twice the present value of Annuity 1. Calculate the present value of Annuity 1
at this annual e§ective interest rate of i.

1. Charon Circuits just announced a 10-year, semiannual coupon payment bond issue with an original issue size of $20 million and a coupon of 8%. No principal will be repaid during the first two years; however, a sinking fund arrangement calls for 10% of the remaining principal to be repaid at the end of each year beginning at the end of year 3 and continuing until the full repayment of the remaining principal at the end of the 10th year. Create a payment schedule detailing Charon’s interest and principal payment obligation. Note that there are two interest payments per year and the sinking fund requires only one principal payment per year.

Prepare year end adjusting entries for these situations.

1. Accrued interest on notes payable is $80.

2. Income taxes incurred but not paid or recordered total to $1,000.

3. Legal fees of $5000 were received in advanced. By the end of the year, 80% of the fees were earned.

4. Services totaling $1,000 have been completed but not recorded or billed.

5. Payroll for the work week (five days) to be paid on Friday is $10,000. The year ends on a Wednesday.

6. Supplies available for use during the year total to $3,400. By the end of the year, there is only$1,700 in supplies remaining.

7. Depreciation for the year total to $3,000.

10. You friend Kei is thinking of opening an art studio. They estimate it will cost $60,000 a year to rent a space downtown. Additionally, they estimate they will spend $80,000 in merchandise each year. Currently, they are earning $40,000 a year working at a museum. (3 pts.)

a. If Kei thinks they will earn $200,000 a year in revenue, should they open the art studio? Briefly explain your answer.

b. If Kei thinks they will earn $120,000 a year in revenue, should they open the art studio? Briefly explain your answer.

c. If Kei thinks they will earn $160,000 a year in revenue, should they open the art studio? Briefly explain your answer.

An Italian currency dealer has good credit and can borrow €800,000 or $1,000,000 for one year. The one-year interest rate in the U.S. is i$ = 2% and in the euro zone the one-year interest rate is i€ = 5.5%. The spot exchange rate is $1.25 = €1.00 and the one-year forward exchange rate is $1.20 = €1.00

a) Show how to realize a certain profit via covered interest arbitrage.

b) Using given one-year forward rate answer what is the spot rate that should prevail if rates of inflation expected to prevail for the next year in the U.S. is 3 percent and 5 percent in the euro zone.

Home Place​ Hotels, Inc., is entering into a​ 3-year remodeling and expansion project. The construction will have a limiting effect on earnings during that​ time, but when it is​ complete, it should allow the company to enjoy much improved growth in earnings and dividends. Last​ year, the company paid a dividend of ​$2.50. It expects zero growth in the next year. In years 2 and​ 3, 4​% growth is​ expected, and in year​ 4, 21​% growth. In year 5 and​ thereafter, growth should be a constant 8​% per year. What is the maximum price per share that an investor who requires a return of 17​% should pay for Home Place Hotels common​ stock?