**Answer:**

a. How much gross income must Kelly recognize?

$0, the distribution will not increase her gross income.

b. What is the basis of each stock right received?

{[(500 x $10)/ (500 x $10 + 500 x $40)] x $70,000} / 500 shares= $14,000 / 500 = $28

c. If she sells the 100 stock rights for $9,000, what is her gain?

gain = $9,000 - (100 x $28) = $6,200

d. If she exercises the 100 stock rights on September 8, what is the basis of the 100 shares she receives and when does the holding period for those shares start?

basis = $2,800 + (100 x $110) = $13,800

Answer:

$201,302

Explanation:

Calculation for How much must he invest today if the first withdrawal is at year-end

First step is to calculate (FVF-OAn,i) using financial calculation

R = 30,000

n = 10

i = 8%

(FVF-OAn,i)=(6.71008)

Now let calculate the amount to be Invested today using this formula

Investment today = R (FVF-OAn,i)

Let plug in the formula

Investment today= 30,000 (6.71008)

Investment today = $201,302

Therefore the amount he must invest today if the first withdrawal is at year-end is $201,302

**Answer:**

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**Explanation:**

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Answer:

d. $317.18

Explanation:

Calculation for what The profit margin based on manufacturing cost for model B-13 is

PROFIT MARGIN

Model B-13

Sales $1775

Less Manufacturing cost:

Direct material $164.50

Material handling $384

(160*$2.40)

Manufacturing supervision $116.92

(7.90*$14.80)

Assembly

(160*$3.30) $528

Machine setup $169.5

(3*$56.50)

Inspection and testing $77.35

(1.70*$45.50)

Packaging $17.55

(0.90*$19.50)

Profit margin $317.18

Therefore The profit margin based on manufacturing cost for model B-13 is $317.18