User Homework Solutions

ACCT 557 WEEK 2 Problem 1 California Surplus Inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an installment basis. The total gain of $75000 was reported for financial reporting purposes in the period of sale. The installment period is 3 years; one-third of the sale price is collected in 2014 and the rest in 2015 and 2016. The tax rate was 35% in 2012, 30% in 2013, and 30% in 2014. The enacted tax r

Other / Other strayer university / ACCT 557 24 Nov 2015

ACCT 557 WEEK 3 Name Date Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield On January 1, 2012, Harrington Company has the following defined benefit pension plan balances. Projected benefits obligation $5,600,000

Other / Other Keller Graduate School of Management / ACCT 557 24 Nov 2015

ACCT 557 WEEK 4 Problem 1 Kingdom Leasing Inc. agrees to lease jousting equipment to Knight Inc. on Jan 1, 2014. They agree on the following terms: 1) The normal selling price of the jousting equipment is $410000 and the cost of the asset to Kingdom Leasing Inc. was $250000. 2) Knight will pay all maintenance, insurance,and tax costs directly and annual payments of $60000 on Jan 1 each year. 3) The lease begins on Jan 1, 2014 and payment

Other / Other strayer university / ACCT 557 24 Nov 2015

FIN 516 WEEK 7 Problem 31.1 on Exchange Rates based on Chapter 31 International Corporate Finance (Excel file included) You are a U.S. investor who is trying to calculate the present value of a €5 million cash inflow that will occur 1 year in the future. The spot exchange rate is S = $1.25/€ and the forward rate is F1 = $1.215/€. You estimate that the appropriate dollar discount rate for this cash flow is 4% and the appropri

Other / Other strayer university / FIN 516 24 Nov 2015

ACCT 557 WEEK 1 Problem 1 You are the Senior Accountant for the Patty Corporation, which has several divisions. They each keep their own accounting books and have chosen the appropriate method of revenue recognition based on their operations. Pat's Electronics Division Pat's Electronics Division sells computers through agents in various cities. Agents send orders and down payments to our company. The division then ships the go

Other / Other strayer university / ACCT 557 24 Nov 2015

FIN 516 WEEK 6 Problem 28.9 on Acquisition Analysis Based on Chapter 28 Mergers and Acquisitions (Excel file included) Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $40. You are thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of $25. You will pay for TargetCo by issuing new shares. There are no expected synergies f

Other / Other strayer university / FIN 516 24 Nov 2015

FIN 516 WEEK 5 Problem 25.6 on PurchaseVersus Lease Based on Chapter 25 Craxton Engineering will either purchase or lease a new $756,000 fabricator. If purchased, the fabricator will be depreciated on a straight-line basis over 7 years. Craxton can lease the fabricator for $130,000 per year for 7 years. Craxton’s tax rate is 35%. (Assume the fabricator has no residual value at the end of the 7 years.) a) What are the free cash flow co

Other / Other strayer university / FIN 516 24 Nov 2015

FIN 516 WEEK 4 Problem 23.3 on Implied Price of Funding Based on Chapter 23 Starware Software was founded last year to develop software for gaming applications. Initially, the founder invested $800,000 and received 8 million shares of stock. Starware now needs to raise a second round of capital, and it has identified an interested venture capitalist. This venture capitalist will invest $1 million and wants to own 20% of the company after the i

Other / Other strayer university / FIN 516 24 Nov 2015

FIN 516 WEEK 1 Problem 17.7 on Ex-dividend PriceBased on Chapter 17 Payout Policy Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 millionshares outstanding with a current market price of $15 per share. Natsam’s board has decided to payout this cash as a one-time dividend. a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash to do a one

Other / Other strayer university / FIN 516 24 Nov 2015

FIN 516 WEEK 2 Problem 14.11 Based on Chapter 14 WACC and Modigiani& Miller Extension Models With Growth Assumptions Consider the entrepreneur described in Section 14.1 (and referenced in Tables 14.1–14.3). Suppose she funds the project by borrowing $750 rather than $500. a. According to MM Proposition I, what is the value of the equity? What are its cash flows if the economy is strong? What are its cash flows if the economy is weak?

Other / Other Kaplan University / FIN 516 24 Nov 2015