Unit 2 Assignment

2-8 The Wendt Corporation had $10.5 million of taxable income,
a) What is the company’s federal income tax bill for the year?
Answer: $3,575,000
50,000*.15=7500
(75000-50000)*.25=6250
(100000-75000)*.34=8500
(335000-100000)*.39=91650
(10000000-335000)*.34=3286100
(10500000-10000000)*.35=175000

b) Assume the firm receives an additional $1 milion of interest income from some bonds it owns. What is the tax on this interest income?
Answer: Tax on just the extra million taxed as ordinary income is: $340,000
50,000*.15=7500
(75000-50000)*.25=6250
(100000-75000)*.34=8500
(335000-100000)*.39=91650
(1000000-335000)*.34=226100

Tax on the original 10500000+interest income 1000000: $3,925,000
50,000*.15=7500
(75000-50000)*.25=6250
(100000-75000)*.34=8500
(335000-100000)*.39=91650
(10000000-335000)*.34=3286100
(11500000-10000000)*.35=525000

c) Now assume that Wendt does not receive the interest income but does receive an additional $1 million as dividends on some stock it owns. What is the tax on this dividend income?
1000000*.30=300000 is taxable
Taxed on its own: $100,250
50,000*.15=7500
(75000-50000)*.25=6250
(100000-75000)*.34=8500
(300000-100000)*.39=78000

Taxed as part of entire income: $3,680,000
50,000*.15=7500
(75000-50000)*.25=6250
(100000-75000)*.34=8500
(335000-100000)*.39=91650
(10800000-10000000)*.35=280000

3-6 Gardial and Sons has a ROA(return on assets) of 12%, a 5% profit margin and a return on equity equal(ROE) to 20%.
a) What is the company’s total assets turnover?
ROA= (Profit Margin) (Total asset turnover)
12=5(Total Asset Turnover)
12/5=2.4= Total Asset Turnover
b) What is the firm’s equity multiplier?
ROE= ROA x Equity Multiplier
20=12 (Equity Multiplier)
20/12= 1.7 = Equity Multiplier

3-11 Complete the balance sheet and sales information in the table that follows for J.White industries using the following financial data:
Total asset