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Posted on Jul 25, 2024

French Corporation wishes to hire Leslie as a consultant to design a comprehensive staff training program. The project is expected to take one year, and

French Corporation wishes to hire Leslie as a consultant to design a comprehensive staff training program. The project is expected to take one year, and the parties have agreed to a tentative price of $60,000. French Corporation has proposed payment of one-half of the fee now, with the remainder paid in one year when the project is complete. Use Appendix A and Appendix B. Appe. Present Value of Annuity of $1 4% 6% 3% 7% 8% Periods 9% 962 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12 659 13.134 13,590 5% 952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7-108 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 943 1.833 2.673 3.465 4.212 4917 5582 6.210 6.802 7360 7887 8.384 8.853 9.295 9.712 10.106 10.477 10.828 11.158 11.470 935 1 BOB 2.624 3.387 4.100 4.767 5.389 5.971 6.515 7024 7.499 7943 8.358 8.745 9. 108 9.447 9.763 10.059 10.336 10.594 926 1.783 2577 3312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.118 917 1.759 2531 3.240 3.890 4.486 5033 5.535 5.995 6.418 6.805 7 161 7,487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 Periods 11% 14% 15% 20% 10% 909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5,759 6.145 6.495 6 B14 7 103 7.367 7506 7.824 8022 8.201 8.365 8.5.14 901 1.713 2444 3.102 3696 4.231 4,712 5:146 5.537 5.889 6 207 6.492 6.750 6.982 7191 7.379 7.549 7.702 7839 7.983 12% -893 1.690 2.402 3037 3 605 4.111 4564 4.968 5.328 5650 5.938 6,194 6.424 6628 6891 6.974 7120 7250 7.356 7:468 13% 885 1.668 2.361 2.974 3.517 3.998 4423 4799 5.132 5.426 5.687 5.918 6.122 6302 6.462 6.604 6.729 6840 6.938 51025 877 1647 2.322 2014 3.433 3.889 4.288 4639 4946 5.216 5453 5.650 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6623 B70 1626 2283 2855 3352 3.784 4160 4.482 4.772 5019 5.234 5.421 5.583 5.724 5847 5.954 6.042 6.12B 5.198 5.259 833 1.528 2.106 2589 2991 3.326 3.605 3.837 4.031 4192 4.327 4.439 4.533 4611 4675 4730 4.775 4.812 4.843 4870 12 13 14 15 16 17 18 19 20 Appendix A Present Value of $1 Periods 3% 4% 5% 7% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 971 943 915 888 863 .837 813 -789 766 744 .722 701 681 .661 642 623 -605 587 570 554 962 925 889 855 822 .790 .760 .731 .703 676 .650 .625 .601 577 555 534 513 494 475 456 952 907 .864 823 .784 746 .711 677 645 614 585 557 530 505 481 458 436 .416 396 377 6% 943 890 840 792 747 705 665 627 592 558 527 497 469 442 417 394 371 350 331 312 935 873 816 763 713 666 623 582 544 508 475 .444 415 388 362 339 317 296 277 258 8% 926 857 .794 .735 681 .630 583 540 500 463 429 397 368 340 315 292 270 250 232 215 9% 917 842 772 .708 650 596 547 502 460 422 388 356 326 299 275 252 231 212 194 178 Periods 13% 885 1 2 3 4 8 9 10 11 12 13 14 10% 909 826 751 683 621 564 513 2467 424 386 350 319 290 263 239 218 11% 901 812 731 .659 593 535 482 434 391 352 317 286 258 232 209 188 170 153 138 12% 893 797 712 636 567 507 452 404 351 322 287 257 229 205 183 163 145 1:30 116 104 783 693 613 543 480 425 376 333 295 261 23 204 180 160 14% 877 769 675 592 519 1456 400 351 308 270 237 20B 182 160 140 123 15% 870 756 658 572 497 432 376 327 284 247 215 182 163 141 123 107 093 081 070 061 20% 833 694 579 482 402 335 279 233 194 162 135 112 093 078 065 054 045 038 031 026 198 125 16 12 18 19 20 TOS 1BO 164 149 098 087 095 083 073 Given that Leslie expects her tax rate to Increase next year, she would prefer to receive more of the income from the project up front. Consider an alternative proposal under which French pays Leslie $42,000 this year, and $16,000 in one year when the contract is complete. Calculate the after-tax benefit of this counterproposal to Leslie and the after-tax cost to French. Show more ***** MOUNT Value of restructured transaction to Leslie: Year 0: Cash received Tax cost Net cash flow $ 0 Year 1: Cash received Tax cost Net cash flow Discount factor (6%) Present value of year 1 cash flow NPV $ 0 Cost of restructured transaction to French: Year 0: Cash paid Tax savings Net cash flow $ Year 1: Cash paid Tax savings Net cash flow Discount factor (6%) Present value of year 1 cash flow $ 0 $ 0 NPV French Corporation wishes to hire Leslie as a consultant to design a comprehensive staff training program. The project is expected to take one year, and the parties have agreed to a tentative price of $60,000. French Corporation has proposed payment of one-half of the fee now, with the remainder paid in one year when the project is complete. Use Appendix A and Appendix B. Appe. Present Value of Annuity of $1 4% 6% 3% 7% 8% Periods 9% 962 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12 659 13.134 13,590 5% 952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7-108 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 943 1.833 2.673 3.465 4.212 4917 5582 6.210 6.802 7360 7887 8.384 8.853 9.295 9.712 10.106 10.477 10.828 11.158 11.470 935 1 BOB 2.624 3.387 4.100 4.767 5.389 5.971 6.515 7024 7.499 7943 8.358 8.745 9. 108 9.447 9.763 10.059 10.336 10.594 926 1.783 2577 3312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.118 917 1.759 2531 3.240 3.890 4.486 5033 5.535 5.995 6.418 6.805 7 161 7,487 7.786 8.061 8.313 8.544 8.756 8.950 9.129 Periods 11% 14% 15% 20% 10% 909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5,759 6.145 6.495 6 B14 7 103 7.367 7506 7.824 8022 8.201 8.365 8.5.14 901 1.713 2444 3.102 3696 4.231 4,712 5:146 5.537 5.889 6 207 6.492 6.750 6.982 7191 7.379 7.549 7.702 7839 7.983 12% -893 1.690 2.402 3037 3 605 4.111 4564 4.968 5.328 5650 5.938 6,194 6.424 6628 6891 6.974 7120 7250 7.356 7:468 13% 885 1.668 2.361 2.974 3.517 3.998 4423 4799 5.132 5.426 5.687 5.918 6.122 6302 6.462 6.604 6.729 6840 6.938 51025 877 1647 2.322 2014 3.433 3.889 4.288 4639 4946 5.216 5453 5.650 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6623 B70 1626 2283 2855 3352 3.784 4160 4.482 4.772 5019 5.234 5.421 5.583 5.724 5847 5.954 6.042 6.12B 5.198 5.259 833 1.528 2.106 2589 2991 3.326 3.605 3.837 4.031 4192 4.327 4.439 4.533 4611 4675 4730 4.775 4.812 4.843 4870 12 13 14 15 16 17 18 19 20 Appendix A Present Value of $1 Periods 3% 4% 5% 7% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 971 943 915 888 863 .837 813 -789 766 744 .722 701 681 .661 642 623 -605 587 570 554 962 925 889 855 822 .790 .760 .731 .703 676 .650 .625 .601 577 555 534 513 494 475 456 952 907 .864 823 .784 746 .711 677 645 614 585 557 530 505 481 458 436 .416 396 377 6% 943 890 840 792 747 705 665 627 592 558 527 497 469 442 417 394 371 350 331 312 935 873 816 763 713 666 623 582 544 508 475 .444 415 388 362 339 317 296 277 258 8% 926 857 .794 .735 681 .630 583 540 500 463 429 397 368 340 315 292 270 250 232 215 9% 917 842 772 .708 650 596 547 502 460 422 388 356 326 299 275 252 231 212 194 178 Periods 13% 885 1 2 3 4 8 9 10 11 12 13 14 10% 909 826 751 683 621 564 513 2467 424 386 350 319 290 263 239 218 11% 901 812 731 .659 593 535 482 434 391 352 317 286 258 232 209 188 170 153 138 12% 893 797 712 636 567 507 452 404 351 322 287 257 229 205 183 163 145 1:30 116 104 783 693 613 543 480 425 376 333 295 261 23 204 180 160 14% 877 769 675 592 519 1456 400 351 308 270 237 20B 182 160 140 123 15% 870 756 658 572 497 432 376 327 284 247 215 182 163 141 123 107 093 081 070 061 20% 833 694 579 482 402 335 279 233 194 162 135 112 093 078 065 054 045 038 031 026 198 125 16 12 18 19 20 TOS 1BO 164 149 098 087 095 083 073 Given that Leslie expects her tax rate to Increase next year, she would prefer to receive more of the income from the project up front. Consider an alternative proposal under which French pays Leslie $42,000 this year, and $16,000 in one year when the contract is complete. Calculate the after-tax benefit of this counterproposal to Leslie and the after-tax cost to French. Show more ***** MOUNT Value of restructured transaction to Leslie: Year 0: Cash received Tax cost Net cash flow $ 0 Year 1: Cash received Tax cost Net cash flow Discount factor (6%) Present value of year 1 cash flow NPV $ 0 Cost of restructured transaction to French: Year 0: Cash paid Tax savings Net cash flow $ Year 1: Cash paid Tax savings Net cash flow Discount factor (6%) Present value of year 1 cash flow $ 0 $ 0 NPV