1. Agency Problems Who owns a corporation? What is the main reason that an agency relationship exists in the corporate form of organizations? In this context, what kinds of problems can arise? 6. Agency Problems suppose you own stock in a company. The current price per share is $25. Another company has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock. Your company' 3 management immediately begins fighting off this hostile bid. Is management acting in the shareholder' s best interests? Why or why not? Chapter 2 1. Building a Balance Sheet Culligan, Inc., has current assets of $5,300, fixed assets of $26,000, current liabilities of $3,900, and long-term debt of $14,200. What is the value of shareholders' equity account for this firm? How much is net working capital? 2. Building an Income Statement Ragsdale, Inc., has sales of $493,000, costs of $210,000, depreciation expense of $35,000, interest expense of $19,000, and a tax rate of 35 percent. What is the net income for the firm? Suppose the company paid out $50,000 in cash dividends. What is the addition to retained earnings? 3. Calculating Taxes The Herrera Co. has $246,000 in taxable income. Using the rates from following Table, calculate the company' 3 income taxes. What is the average tax rate? What is the marginal tax rate? Taxable income Tax rate U-50,UUU 'I 5% 50,0007 5,000 25% 75300-100300 100,000- 39%