A tornado wiped out a grove of ornamental trees growing near her home. She paid $6,100 to replace the trees and received no insurance reimbursement. Compute Ms. White's casualty loss deduction if her AGI is: a. $53,000. b. $210,000.
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The federal annual interest rate throughout the 18 month period between April 15, 2014, and the assessment date was 3 percent per annum. Ignore the effect of interest compounding. The IRS agent who audited the return imposed a negligence penalty on t..
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Four firms control the market for a particular good, resulting in an HHI of 6,650. Total industry sales are $1,750, and it is known that one firm has sales of $1,400 and another sales of $175. If each of the remaining two firms has the same sales, th..
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Stanford Simmons, who recently sold his Porsche, placed $10,000 in a savings account paying annual compound interest of 6 percent. Calculate the amount of money that he will have accrued if he leaves the money in the bank without making any additiona..
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Suppose that an investor has shorted shares worth 10,000 dollars of company X and bought shares worth 6,000 dollars of company Y. The proportional bid-offer spread for company X is .02, and the proportional bid-offer spread for company Y is .04. What..
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You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.4, a debt-to-equity ratio of .6, and a tax rate of 40 percent. Assume a risk-free rate of 4 percent a..
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Firm S is considering adding a robotic device to its production line. The device base price is $1,038,000.00, and it would cost another $21,500.00 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates a..
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A company just paid out an annual dividend of $2. If the annual dividend is maintained at the same level for the next 5 years, and grows at 5% annually thereafter, what should be the price of a share today? Assume that the required rate of return for..
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You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 1.70 percent. Your broker has determined the following info..
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Eau Claire Paper Mill, Inc., had, at the beginning of the current fiscal year, April 1, 2010, retained earnings of $406,270. During the year ended March 31, 2011, the company produced net income after taxes of $642,763 and paid out 35 percent of its ..
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Last national bank is offering you a loan at 10%; payments on the loan are to be made monthly. Credit Onion is offering you a loan where payments are to be made semi-annually; the rate on the loan is also 10%. A local bank down the street is also off..
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The present value of an increasing perpetuity due with quarterly payments $100, $200, $300, etc. is three times the present value of a perpetuity immediate with level queerly payments $500. If both perpetuities use the same annual effective interest ..
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