1. What happened to Computrons Market Value Added (MVA)?

2. Assume that a corporation has $100,000 of taxable income from operations plus $5,000 of interest income and $10,000 of dividend income. What is the companys federal tax liability?

3. Assume that you are in the 25% marginal tax bracket and that you have $5,000 to invest. You have narrowed your investment choices down to California bonds with a yield of 7% or equally risky ExxonMobil bonds with a yield of 10%. Which one should you choose and why? At what marginal tax rate would you be indifferent to the choice between California and ExxonMobil bonds?

Income Statements Statement of Cash Flows Operating Activities Net income (\$ 95,136) Adjustments: Noncash adjustments: \begin{tabular}{lr} Depreciation and amortization & 116,960 \\ Changes in working capital: & \\ Change in accounts receivable & (280,960) \\ Change in inventories & (572,160) \\ Change in accounts payable & 178,400 \\ Change in accruals & 148,960 \\ \cline { 2 } t cash provided (used) by operating activities & (\$03,936) \end{tabular} Investing Activities CashusedtoacquirefixedassetsChangeinshort-terminvestmentsNetcashprovided(used)byinvestingactivities($711,950)28,600$683,350) Financing Activities Change in notes payable $520,000 Change in long-term debt 676,568 Change in common stock Payment of cash dividends Net cash provided (used) by financing activities Summary Net change in cash Cash at beginning of year Cash at end of year Income Statements Statement of Cash Flows Operating Activities Net income (\$ 95,136) Adjustments: Noncash adjustments: \begin{tabular}{lr} Depreciation and amortization & 116,960 \\ Changes in working capital: & \\ Change in accounts receivable & (280,960) \\ Change in inventories & (572,160) \\ Change in accounts payable & 178,400 \\ Change in accruals & 148,960 \\ \cline { 2 } t cash provided (used) by operating activities & (\$03,936) \end{tabular} Investing Activities CashusedtoacquirefixedassetsChangeinshort-terminvestmentsNetcashprovided(used)byinvestingactivities($711,950)28,600$683,350) Financing Activities Change in notes payable $520,000 Change in long-term debt 676,568 Change in common stock Payment of cash dividends Net cash provided (used) by financing activities Summary Net change in cash Cash at beginning of year Cash at end of year