1) Corporate bonds issued by Johnson corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds?
2) ) Edmund Enterprises recently made a large investment to upgrade its technology although these improvement won’t have much of an impact on performance in the short run, they are expected to reduce future costs significantly. What impact will this investment have on Edmund Enterprises earnings per share this year? What impact might this investments have on the company’s intrinsic value and stock price?
5)Kendall Corners recently reported net income of $3.1 million and depreciation of $50,000 what was its net cash flow? Assume it had no amortization expense.
6)In its most recent financial statements, Del-Castillo Inc. Reported $70 million of net income and $900 million retained earnings. The previous retained earnings were $855 million. How much in dividends did the firm pay to shareholders during the year?
7) The Talley corporation had a taxable income of $365,000 from operations after all operating costs but before 1) interest charges of $50,000 -2) Dividends received of $15,000 3) dividends paid of $25,000 and 4) income taxes. Where the firm’s income taxes liability and its after tax-income? What are the company’s marginal and average tax rates on taxable income?