FIN 202 FINANCE PROBLEM SET 1. What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant. 2. What are the four primary disadvantages of the sole proprietorship and partnership forms of business organization? What benefits are there to these types of business organization as opposed to the corporate form? 3. Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.3 million. Klingon's current balance sheet shows net fixed assets of $3.2 million, current liabilities of $900,000, and net working capital of $215,000. If all the current assets were liquidated today, the company would receive $1.25 million cash a) What is the book value of Klingon's total assets today? b) What is the market value? 4. The Anberlin Co. had $255,000 in 2011 taxable income. Using the tax rates given in Table below a) Calculate the company's 2011 income taxes. b) What is the average tax rate? c) What is the marginal tax rate? Taxable Income Tax Rate $0-50,000 $50,001 - 75,000 $75,001-100,000 $100,001-335,000 $335,001-10,000,000 $10,000,001 15,000,000 $15,000,001-18,333,333 $18,333,3334+ 15% 25% 34% 39% 34% 35% 38% 35%