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Planning a Budget for Orlo Company

See excel attached: Orlo Company is planning their budget for the first half of 2012. Their budgeted sales for the last part of 2011 and the first 6 months of 2012 are as follows: Month Sales Nov-11 $200,000 Dec-11 $150,000 Jan-12 $100,000 Feb-

Future Value of the Investment

Details: A grandmother is looking for a plan to finance her new grandchild's college education. She has $25,000 to invest. Search the internet and locate a long-range investment plan, CD, Savings Bond, etc, for the grandmother. The plan is to earn compound interest. Calculate the future value of the investment. You must use

Kim had the following transactions for 2006: Salary: $Kim had the following transactions for 2006: Salary: $48,000 Damage award (compensatory) for city bus accident: $18,000 Loss on sale of stock investment: $5,600 Loan from father to purchase auto: $14,000 Alimony paid to ex-wife: $8,000 What is Kim's AGI for 2006? 2. John forms a corporation and transfers property having a basis to him of $18,000 and a fair market value of $26,000 to the corporation for 1,000 shares of $10 par stock. One year later, Hal transfers property having a basis to him of $2,500 and a fair market value of $3,500 for 100 shares of the stock. Hal is not related to John. The corporation issued no other stock. How much gain does John recognize on his exchange? What is the basis to John of his 1,000 shares? b. What gain or loss is recognized by the corporation when it issues its shares to John? What is the basis to the corporation of the property it received from John? c. How much gain does Hal recognize on his exchange? What is the basis to Hal of his 100 shares? 3. Shareholders in closely held C-corporations often pay themselves large salaries in order to avoid double taxation on corporate income. Briefly explain the double taxation problem and how paying large salaries to owners avoids it. b. Briefly discuss how the reasonable compensation issue applies to S-corporations. c. Briefly discuss the IRS s position on reasonable compensation for owner-employees of closely held C-corporations.

1. Kim had the following transactions for 2006: Salary: $48,000 Damage award (compensatory) for city bus accident: $18,000 Loss on sale of stock investment: $5,600 Loan from father to purchase auto: $14,000 Alimony paid to ex-wife: $8,000 What is Kim's AGI for 2006? 2. John forms a corporation and transfers property hav

business and financial environment

Consider a newly-listed company of interest to you and using the 2009/2010 annual accounting reports describe its business and financial environment. Subsequently, critically discuss the following topics: a) Write a report for senior managers on how they could improve the company's financial performance and achieve the primar

Corporate Valuation Models

Based on the corporate valuation model, Bernile Inc.'s value of operation is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long term debt, $40 million of common stock (par plus pain -in

Finance: Sales or purchases of Treasury securities to increase the M1 money supply

Assume there is $400 billion of currency in circulation in the economy outside the banking system, that depository institutions in the economy have $800 billion in checkable deposits, and that those same depository institutions have $80 billion in reserves on deposit at the central bank. All depository institutions are "loaned o

Expected rate of return..

Starlight, Inc. must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firm's analysis. Asset A Asset B Rate of Return Probability Rate of Return Probability 8% 40% 7%

Prepare budgeted financial statements for the Ma & Pa Kettle's Chili Company: 1. Ma & Pa Kettle's Chili Company has begun selling a new chili recipe and they want you to help them with next year's budgeted financial statements. Using the Ma & Pa Kettle information complete Ma & Pa's forecast and answer the questions which follow. Ma & Pa Kettle's Chili Company has begun selling a new chili recipe and they want you to help them with next year's budgeted financial statements. Using the worksheet below, complete Ma & Pa's forecast and answer the question which follows. Assumptions To begin with, Ma & Pa are sure sales will grow 50% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage). Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year. Lastly, the current dividend policy will be continued next year. Ma & Pa Kettle Chili Company, Inc. Financial Forecast for 2010 2009 Est for 2010 Sales $10,000 _______ COGS 4,000 _______ Gross Profit 6,000 _______ Fixed Expenses 3,000 _______ Before-Tax Profit 3,000 _______ Tax @ 33.3333% 1,000 _______ Net Profit $2,000 _______ Dividends $0 _______ Current Assets $25,000 _______ Net Fixed Assets 15,000 _______ Total Assets $40,000 ______ Current Liabilities $17,000 ______ Long-term debt 3,000 ______ Common Stock 7,000 ______ Retained Earnings 13,000 ______ Total Liabs & Eq $40,000 ______ Amount need to balance the balance sheet _____ This is the question. (Projected total assets minus projected total liabilities & equity *) If this number is positive it means Ma & Pa need additional external funding to finance their projected asset growth. If this number is negative it means Ma & Pa have programmed too much financing for the amount of assets they project.

Prepare budgeted financial statements for the Ma & Pa Kettle's Chili Company: 1. Ma & Pa Kettle's Chili Company has begun selling a new chili recipe and they want you to help them with next year's budgeted financial statements. Using the Ma & Pa Kettle information complete Ma & Pa's forecast and answer the questions which

Monetary Impact, Cost Benefit and Additional Benefit

1. Identify one each (1) benefit, (2) disbenefit, and (3) monetary cost that would impact each of the following projects: a. A new electrical distribution station in a developing part of the city, with feeds from the city power plant and from a regional electrical grid b. Annexation of an adjoining semirural area into th

S&R Rentals rents and services different types of yard-improvement equipment. Information about the company's financial performance for a recent fiscal period is provided below:

The following document contains some brain teasers randomly selected for another study template by my peers for an upcoming study session 1. S&R Rentals rents and services different types of yard-improvement equipment. Information about the company's financial performance for a recent fiscal period is provided below: Average

Gross estate address including Van Gogh artwork

Susan owns a Van Gogh painting valued at $10 million. In addition to the painting, Susan owns approximately $15 million of other assets. For estate planning purposes, Susan has given the painting to the Van Gogh museum in Amsterdam with the understanding that Susan will retain the painting in her residence during her lifetime; t

This posting addresses the value of the decedent's estate.

Suppose the decedent dies in 2006 and has interests in the following assets: $400,000 residence owned jointly with right of survivorship with her husband; $500,000 real estate parcel owned jointly with right of survivorship with her sister (decedent furnished all consideration); $200,000 brokerage account owned as a tenancy-in-

Post-2008 Economic and Financial Realities

Given the new economic and market realities prevailing since the 2008 great recession, first list and then explain in detail four behavioral finance lessons that can be of value to anyone going forward in life. You may answer this question from the perspective of your own personal life as an individual, or the perspective of you

Finance Problem: Basic Valuation

B5. (Expected return and risk) General Eclectic Corporation is considering three possible capital investment projects. The projected returns depend on the future state of the economy as given here. a. Calculate each project's expected return, variance, and standard deviation. b. Rank the projects on the basis of (1) expected

fraud red flags

While performing an audit of CCC Corporation, the audit team noticed something that didn't look right. The company's receivables aging report showed that bank loan receivables were approximately $91 million. That audit team calculated the bank loan edible receivables to be approximately $50 million. The client didn't identify sp

PV of Accounts, PV of Income Stream & Discounted Value Gold Mine

A. Suppose your bank account will be worth $15,000.00 in one year. The interest rate (discount rate) that the bank pays is 7%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is only 4%? B. Suppose you have two bank accounts, one called Account A and an

Transaction Analysis and Financial Statements

Expert Consulting Services Inc. was organized on March 1, 2010 by two former college roommates. The corporation provides computer consulting services to small businesses. The following transactions occurred during the first month of operations: March 2: Received contributions of $20,000 from each of the two principa

Cost of equity and capital

How will Rensselaer Felt's WACC and cost of equity change if it issues $ 50 million in new equity and uses the proceeds to retire long- term debt? Assume the company's borrowing rates are unchanged. Use the three- step procedure . Step 1 Calculate the opportunity cost of capital. Step 2 Estimate the cost of debt, r D , at the

Evaluating investment opportunity: Japan example

You have an investment opportunity in Japan. It requires an investment of $1 million today and will produce a cash flow of Y114 in one year with no risk. Suppose the risk free interest rate in the US is 4%, the risk free interest rate in Japan is 2%, and the current competitive exchange rateis Y110 per $1. What is the NPV of the

Which stock is riskier? Explain.

Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50.

Subchapter S; S corporations; Lang Corporation; S corporation stock purchases

1. What are the eligibility requirements that a corporation must meet in order to qualify under Subchapter S? 2. What limits are placed on the selection of a tax year of an S corporation? How do these limits differ from those applicable to C corporations and partnerships? 3. Durrabusiness is organized as a regular C corpo

Characteristics of MACS; efficiency in handling insurance claims

Chow Company is an insurance company in Hong Kong. Chow hires 55 people to process insurance claims. The volume of claims is extremely high and all claims examiners are kept extremely busy. The number of claims in which errors are made runs about 10%, If a claim has an error, it must be corrected by the claims examiners. Aft

Financial Management Theory

1. Much of financial management theory is based upon the assumption that individuals act rationally in their decision making. Text has noted several areas where the conclusion is that individuals do not act rationally. What is the implication of this conclusion on our understanding of traditional financial management. 2. How