Last year, your company had sales of $3.6 million, cost of goods sold of $2.3 million and operating expenses amounting to $840,000. The firm had $114,000 in depreciation expense. In addition, the firm paid 8% interest on $625,000 in bonds, received $30,000 in dividend income, and sold property for a $10,000 capital loss. What was the firm's tax payment? \begin{tabular}{l} $68,460 \\ $63,210 \\ $9,010 \\ $65,310 \\ $62,160 \\ \hline \end{tabular} Question 2 1 pts Given an anticipated inflation premium of 1.30% and a nominal rate of interest of 5.20%, what is the real interest rate? Round your answer to 4 decimal places. 3.85% 6.57% 3.90% 3.75% 4.34% Given an anticipated inflation premium of 1.45% and a real rate of interest of 4.34%, what is the nominal interest rate? Round your answer to 4 decimal places. 2.47% 5.79% 5.85% 2.85% 5.00% Question 4 1 pts Which of the following best describes the goal of the firm? Maximizing the value of the firm's equity. Maximizing the current dividend paid to shareholders. Maximizing the value of the firm's debt. Maximizing the firm's profits. Minimizing the furm's risk. Last year, California Sushi and Such (CSS) had sales of $65 million. The firm's operating expenses amounted to $20 million and costs of goods sold totaled $15 million. In addition. CSS received $80,000 in dividend income, and paid $300,000 in dividends to its stockholders. CSS has $25 million in bonds outstanding with an annual interest payment of 9%. The firm also had $4 million in depreciation expense, and sold land for $3.5 million that had been purchased for $2.5 million several years earlier. What is the firm's tax liability? \begin{tabular}{|l} $4,995,900 \\ $5,460,000 \\ $5,205,900 \\ $5,214,300 \\ \hline$5,189,100 \\ \hline \end{tabular} Question 6 1 pts Net operating losses may be paid off by the stockholders deducted from the current year's earnings allocated over the next 3 years carried forward indefinitely. carried back 3 years or carried fonward up to 5 years Capital losses may be carried back 2 years or carried forward up to 20 years paid off by the stockholders carried back 3 years or carried forward up to 5 years deducted from the current year's earnings allocated over the next 3 years Question 8 1 pts What is the tax liability for a corporation with $13,100,000 in taxable income? $3,144,000 $2,620,000 $4,454,000 $2,751,000 $4,585,000 What is the tax liability for a corporation with $10,200,000 in taxable income? \begin{tabular}{|l} $3,468,000 \\ $3,570,000 \\ $2,448,000 \\ $2,142,000 \\ \hline$2,040,000 \\ \hline \end{tabular} Question 10 1 pts The yield curve is typically flat downward sloping moving up and down frequently U-shaped upward sloping Since there is a virtual certainty that the U.S. government will pay interest on Treasury securities and will redeem them at face value when they mature, Treasury securities are free of any risk. liquidity maturity interest rate default inflation Question 12 1 pts To raise $5 million, Southeastern Corporation decides to issue bonds. If Southeastern does not register the bonds with the SEC and then sells the entire bond issue to Metropolitan Life Insurance Company, this issue is called a(n): best efforts issue negotiated purchase privileged subscription underwritten issue private placement What business type is a business owned by individual, therefore subject to a limited life and unlimited liability? Limited partnership An association Sole proprietorship Corporation General partnership Question 14 1pts The New York Stock Exchange is an example of a commodity exchange. a primary market. a derivative securities market. a secondary market. an over-the-counter market. What is underwriting? None of these describe the process of underwriting. Underwriting is the process of purchasing and selling of a new security issue by an imvestment banker. Undenwriting is the process of placing debt with a private equity group. Underwriting is the process of a mutual fund selling new shares to the public. Underwriting is the process of firm selling new securities directly to the public. Question 16 1pts If an issuing firm sells securities to the investing public without involving an investment banker, the issue is called: a privileged subscription a best efforts offer a private placement a negotiated purchase a direct sale What distinguishes a public offering from a private placement? In a private placement, all investors have the opportunity to acquire a portion of the financial claims being sold, but not so in a public offering. Private placements are illegal in the U.S., so the question is immaterial. None of these statements is correct. In a public offering, all investors have the opportunity to acquire a portion of the financial claims being sold. but not so in a private placement. Actually, these are both the same just different terms used by different industries. Question 18 What distinguishes the money market from the capital market? The money market deals with stocks, whereas the capital market deal with bonds, The money market deals with cash instruments. Whereas the capital market deals with real assets. The money market deals with short-term instruments, whereas the capital market deals with long-term instruments. None of these statements is correct. The money market deals with instruments valued at $1 million or less, whereas the capital market deals with larger instruments. The legal form of business that allows a firm to function separate and apart from its owners is the sole proprietorship association general partnership corporation limited partnership Question 20 1 pts Suppose your firm had the following taxable income amounts: 2019 (\$5 million) operating loss 2020$2 million 2021$2 million 2022$2 million After you "carry forward" the operating loss, what is the effective taxable income for 2021? \$1 million $4 million $2 million $3 million $0