1. Alan and Sara Winthrop are a married couple who file a joint income tax return. They have two children, so they claim a total of 4 exemptions ($4,050 for each exemption). In addition, they have legitimate itemized deductions totaling $25,750. Their total income from wages is $213,900. Assume the following tax table is applicable:

   Married Couples Filing Joint Returns

   If Your Taxable Income Is	You Pay This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base	Average Tax Rate at Top of Bracket
   Up to $18,650	$0.00	10.0%	10.0%
   $18,650-$75,900	1,865.00	15.0	13.8
   $75,900-$153,100	10,452.50	25.0	19.4
   $153,100-$233,350	29,752.50	28.0	22.4
   $233,350-$416,700	52,222.50	33.0	27.1
   $416,700-$470,700	112,728.00	35.0	28.0
   Over $470,700	131,628.00	39.6	39.6

   What is their marginal tax rate?

   	a.	35.0%
   	b.	28.0%
   	c.	10.0%
   	d.	33.0%
   	e.	15.0%

5 points

QUESTION 6

1. Exhibit 4.1 The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

   Balance Sheet (Millions of $)
   Assets		2018
   Cash and securities		$3,000
   Accounts receivable		15,000
   Inventories		18,000
   Total current assets		$36,000
   Net plant and equipment		$24,000
   Total assets		$60,000
   Liabilities and Equity
   Accounts payable		$18,630
   Accruals		8,370
   Notes payable		6,000
   Total current liabilities		$33,000
   Long-term bonds		$9,000
   Total liabilities		$42,000
   Common stock		$5,040
   Retained earnings		12,960
   Total common equity		$18,000
   Total liabilities and equity		$60,000
   Income Statement (Millions of $)		2018
   Net sales		$84,000
   Operating costs except depreciation		78,120
   Depreciation		1,680
   Earnings before interest and taxes (EBIT)		$4,200
   Less interest		900
   Earnings before taxes (EBT)		$3,300
   Taxes		1,320
   Net income		$1,980
   Other data:
   Shares outstanding (millions)		500.00
   Common dividends (millions of $)		$693.00
   Int rate on notes payable & L-T bonds		6%
   Federal plus state income tax rate		40%
   Year-end stock price		$47.52

   Refer to Exhibit 4.1. What is the firm's quick ratio? Do not round your intermediate calculations.

   	a.	0.61
   	b.	0.55
   	c.	0.65
   	d.	0.52
   	e.	0.50