Answer:
Option A is correct.
Explanation:
Though it might be seen initially that the CEO is not trying to increase the value of the shareholders wealth because the share price of the acquiring firm is falling down. This is half picture of the story. It is possible that this acquisition will bring value to the shareholders of the acquiring firm because the acquiring firm will add value to the firm acquired and the sales will grow drastically. As the story we are told is till interval so initially it is more relateable to principal agent problem. Principal agent problem is that agent (CEO) is not acting in the best interest (Wealth maximisation) of the principal (shareholders).
The CEO is not behaving unethically because there are doubts, CEO is pursuing profit maximization is totally wrong because we are not seeing short term profits and it is evident from the past that many parent companies added values to its subsiduaries.
Answer:
$669,950
Explanation:
Computation of taxable income
Bali’s net book income before tax$605,800 Excess of book over tax depreciation25,600
Book gain on equipment sale$(23,000)
(53,000-27,400)
Tax gain on equipment sale38,000 15,000
(23,000-38,000=15,000)
Nondeductible loss on sale to related party 23,550
(75,000-51,450)
Taxable income$669,950
(605,800+25,600+15,000+23,550)
Therefore the taxable income will be $669,950
To calculate the effective interest rate you'll need the following formula.
(1+ APR / n ) ^n -1 *100.
IT looks alot harder than it is.
APR has to be expressed as a decimal, so 0.1642.
n is the period. as it is daily, n=365.
1+(0.1642/365) to the power of 365. will give you 1.1784....
Minus 1, and times by 100 to get it as a percentage = 17.84%
Answer:
The correct option for Harold to do after he has received the cost of the annuity is to include the entire amount of each annuity payment in gross income
Explanation:
As the cost of the annuity has been received by Harold and whatever he is receiving afterwards is the income. Thus he will include the complete value in the gross income and the taxes will be calculated accordingly.