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Chapter 21: Q. bFCT (page 481)
If administrators of government pension funds for public employees were to discover in a future yes that they had used a discount rate that was too high, who would end up having to ensure payment of promised pensions?
It combine the digitized PPO issued by CGA's PFMS solution.
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Take a look at Figure 21-1. Suppose that Q = 10 acres and P = $2000 per acre. What is the dollar amount of economic rents received during the current period, and why is this amount classified as economic rents?
Classify the following items as either financial capital or physical capital.
a. A computer server owned by an information-processing company
b. set aside in an account to purchase a computer server
c. Funds raised through a bond offer to expand plant and equipment
d. A warehouse owned by a shipping company
Suppose that one of your classmates informs you that he has developed a method of forecasting stock market returns based on past trends. With a monetary investment from you, he claims that the two of you could profit handsomely from this forecasting method. How should you respond to your classmate?
Do you suppose that the degree of randomness in the stock prices indicated by the random walk theory has increased or decreased since early 2007? Explain your reasoning.
The owner of WebCity is trying to decide whether to remain a proprietorship or to incorporate. Suppose that the corporate tax rate on profits is percent and the personal income tax rate is localid="1653216490078" percent. For simplicity, assume that all corporate profits (after corporate taxes are paid) are distributed as dividends in the year they are earned and that such dividends are subject to tax at the personal income tax rate.
a. If the owner of WebCity expects to earn localid="1653216495193" in before-tax profits this year, regardless of whether the firm is a proprietorship or a corporation, which method of organization should be chosen?
b. What is the dollar value of the after-tax advantage of the form of organization determined in part (a)?
c. Suppose that the corporate form of organization has cost advantages that will raise beforetax profits by localid="1653216505277" . Should the owner of WebCity incorporate?
d. Based on parts (a) and (c), by how much will after-tax profits change due to incorporation?
e. Suppose that tax policy is changed to completely exempt from personal taxation the first localid="1653216517393" per year in dividends. Would this change in policy affect the decision made in part (a)?
f. How can you explain the fact that even though corporate profits are subject to double taxation, most business in the United States is conducted by corporations rather than by proprietorships or partnerships?
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