Given a tax rate of 13% for income up to $50,000, a tax rate of 25% for income between $50,001 and $75,000, and a tax rate of 34% for income between $75,001 and $100,000, and a tax rate of 39% for income above $100,001, if ABC Inc. reports taxable income of $175,000. How large is this firm's tax bill?

Select one:

a.

$61,250

b.

$51,500

c.

$48,750

d.

$50,150

e.

$91,125

Which of the following is correct regarding agency costs?

Select one:

a.

Direct costs occur when managers, acting to minimize the risk of the firm, forego investments shareholders would prefer they take.

b.

Direct costs occur when managers, acting to minimize the risk of the firm, forego investments shareholders would prefer they take

c.

Indirect costs occur when managers buy assets considered unnecessary by the firm's owners.

d.

Company paid club memberships for executives are an example of indirect agency costs.

e.

Direct costs occur when shareholders must incur costs to monitor the manager's actions.

ABC Products needs to replace its rawhide tanning and molding equipment. It can be used for five years and will have no salvage value. The equipment costs $930,000. The firm can lease it for $245,000 a year, or it can borrow the money to purchase the equipment at 6%. The firm's tax rate is 40%. The CCA rate is 20% (Class 8).What is the present value of the depreciation tax shield?

Select one:

a.

$309,777

b.

$377,177

c.

$336,959

d.

$343,885

e.

301,242