Reference no: EM131446801
Business Ethics Jon-T Chemicals, Inc. (Chemicals), was an Oklahoma corporation engaged in the fertilizer and chemicals business. John H. Thomas was its majority shareholder and its president and board chairman. Chemicals incorporated Jon-T Farms, Inc. (Farms), as a wholly owned subsidiary, to engage in the farming and land-leasing business. Chemicals invested $10,000 to establish Farms. All the directors and officers of Farms were directors and officers of Chemicals, and Thomas was its president and board chairman. In addition, Farms used officers, computers, and accountants of Chemicals without paying a fee, and Chemicals paid the salary of Farms &’s only employee. Chemicals made regular informal advances to pay Farms &’s expenses. These payments reached $7.5 million by January 1975. Thomas and Farms engaged in a scheme whereby they submitted fraudulent applications for agricultural subsidies from the federal government under the Uplands Cotton Program. As a result of these applications, the Commodity Credit Corporation, a government agency, paid over $2.5 million in subsidies to Thomas and Farms. After discovering the fraud, the federal government obtained criminal convictions against Thomas and Farms. In a separate civil action, the federal government obtained a $4.7 million judgment against Thomas and Farms, finding them jointly and severally liable for the tort of fraud. Farms declared bankruptcy, and Thomas was unable to pay the judgment. Because Thomas and Farms were insolvent, the federal government sued Chemicals to recover the judgment. Was Farms the alter ego of Chemicals, permitting the United States to pierce the corporate veil and recover the judgment from Chemicals? Did Thomas act ethically in this case? United States of America v. Jon-T Chemicals, Inc., 768 F.2d 686, Web 1985 U.S. App. Lexis 21255 (United States Court of Appeals for the Fifth Circuit)
A big advantage of corporate existence is the limited liability protecting individuals from liability for corporate obligations, but Courts will look at the legitimacy of corporate existence and ask if the limited liability protection should be sustained or whether the corporate veil should be pierced. What factors will lead a Court to pierce the corporate veil? In end of Chapter Case 37.12, should the corporate veil be pierced? Why or why not?
Result in initial aftertax cash savings
: In Excel, Och Inc is considering a project that will result in initial aftertax cash savings of $3.5 million at the end of the first year, and these savings will grow at a rate of 4% per year indefinitely. The firm has a target debt equity ratio of ...
|
Sample of historical returns for a mutual fund
: You have a sample of historical returns for a mutual fund. The 5 returns are 8.25%, -4.6%, 10.5%, 5.0%, -3%. What is the average return? What is the variance of these returns?
|
What is the cost of equity of this firm
: Suppose the Simmons Co's common stock has a beta of 1.37, the risk-free rate is 3.4 percent, and the market risk premium is 8.2 percent. The yield to maturity in the firm’s bonds is 7.6 percent and the debt-equity ratio is .45. What is the cost of eq..
|
Net working capital associated with project can be recovered
: Frank’s Sausage is looking at a new sausage system with an installed cost of $480,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $70,000. The net ..
|
Engage in the farming and land-leasing business
: Business Ethics Jon-T Chemicals, Inc. (Chemicals), was an Oklahoma corporation engaged in the fertilizer and chemicals business. John H. Thomas was its majority shareholder and its president and board chairman. Chemicals incorporated Jon-T Farms, Inc..
|
Essential feature of an annuity with growth
: Which of the following is NOT an essential feature of an annuity with growth? Suppose the Strong Form of the Efficient Markets Hypothesis is correct. Which of the following is NOT an implication of the Hypothesis?
|
Make annual payments into a savings plan
: A couple will retire in 40 years; they plan to spend about $39,000 a year in retirement, which should last about 20 years. They believe that they can earn 8% interest on retirement savings. If they make annual payments into a savings plan, how much w..
|
Create comprehensive report using microsoft word
: Create a comprehensive report using Microsoft Word. Include a Microsoft Excel document that illustrates your calculations for all weeks. You may use the formulas embedded in Microsoft Excel and/or a financial calculator for these calculations.
|
Assess performance based on service-quality and cost
: Which of the following is a measure developed by successful firms to focus on customer requirements and to assess performance based on service, quality, and cost?
|