Solve these questions correctly.

1.Lenovo, Inc., a resident foreign corporation, has earned the following during the year 2018:

DIVIDEND INCOME FROM:

Microsoft, a non-resident foreign corporationP500,000

Intel, a resident foreign corporation (ratio of Philippine

income over world income for the past 3 years is 40%)400,000

Panday, a domestic corporation300,000

INTEREST INCOME FROM:

Current account, BDO600,000

Savings deposit, ABN-AMRO bank, UK700,000

FCDU deposits800,000

ROYALTY INCOME from various domestic corporations100,000

The total final tax on passive income for the taxable year is:

a)P200,000c) P328,000

b)P260,000d) P1,088,000

2.A domestic corporation had the following data on income and expenses during the year 2018:

Gross income, PhilippinesP10,000,000

Business expenses, Philippines2,000,000

Gross income, China5,000,000

Business expenses, China1,500,000

Interest income, Metrobank Philippines300,000

Interest income, Shanghai Banking Corporation, China100,000

Rent Income, net of 5% withholding tax190,000

How much was the income tax payable?

a)P3,540,000c) P3,440,000

b) P3,530,000d) P2,480,000

3.Hannah Corporation, a corporation engaged in business in the Philippines and abroad has the following data for the current year:

Gross income PhilippinesP975,000

Expenses, Philippines750,000

Gross Income, Malaysia770,000

Expenses, Malaysia630,000

Interest on bank deposit25,000

Determine the income tax due is the corporation is

DomesticResident Foreign CorpNonresident Foreign Corp

a)P116,800P72,000P320,000

b)P109,500P67,500P 300,000

c)P312,000P515,850P116,800

d)P109,500p72,000P300,00

4.The following information were taken from the records of ABC, Inc., a domestic corporation already in its 5th year of operations:

Gross profit from salesP3,100,000

Capital gain on sale directly to buyer of

shares in a domestic corporation100,000

Dividend from:

Domestic Corporation20,000

Resident Foreign Corporations10,000

Interest on:

Bank deposit20,000

Trade Receivable50,000

Business expenses2,100,000

Income tax withheld115,000

Quarterly income tax payments160,000

Income tax payable per quarter(10,000)

The income tax payable at the end of the quarter:

a)P33,000

b)P43,000

c)P63,000

d)P318,000

5.Bahala College, a proprietary educational institution provided the following data for 2018:

Income from tuition feesP3,000,000

School miscellaneous fees250,000

Income from canteen operations750,000

Dividend Income:

Domestic Corporation100,000

Foreign Corporation50,000

Rent Income (net)5,700,000

Operating Expenses4,125,000

Quarterly Income tax payments250,000

The income tax payable of the school is:

a)P37,500

b)P337,750

c)P1,212,500

d)P1,227,500

14. Use calculus to find the first order conditions. Use solver then to solve the first order conditions. Show your work for the first order conditions and include the relevant portion of excel f(x.) =-22x2 + 22xy - 1ly2 + 110x -40y - 23A risk neutral principal hires a risk averse agent to work on a project. The agent' 5 utility function is V(w.-i) = WT: - 3(a). where w is wage, 303,-) is the disutility associated with the effort level 3,- exerted on the project. The agent can choose one of two possible effort levels, 814 or 31,, with associated disutility levels 3(EH) = 4, and 3(a) = 2. 0 If the agent chooses effort level 61.1, the project yields 80 with probability 1/ 2, and 0 with probability 1 / 2. e If the agent chooses q, the project yields 80 with probability 1/4 and 0 with probability 3 /4. The reservation utility of the agent is 0. Let {wH,wL} be an outputcontingent wage contract, where am is the wage paid if the project yields 80, and am is the wage if the yield is U. The agent receives a xed wage if :0 H = wL. (a) If effort is observable, which effort level should the principal implement? What is the best wage contract that implements this effort? [5 marks] (b) Suppose effort is not observable. What is the optimal contract that the principal should offer the agent? What effort level does this contract im- plement? [8 marks] (c) Compare the optimal contract in part (a) with that in part (b) and provide intuition for any similarity or difference in the income risk they impose on the agent and in the principal's payoff. ['2' marks]