Chapter 1(1)

# Chapter 1(1) - Math 3650 Practice Problems Chapters 1 1 As...

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Math 3650 – Practice Problems - Chapters 1 1. As measured by the total number of firms, what is the most common type of business structure in the U.S.? 2. Most large businesses are organized under what type of business structure? 3. What are the advantages and disadvantages of the Corporate Structure? 4. You are a shareholder in a C corporation. The corporation earns \$8 per share on a pretax basis. After it pays taxes, the corporation will distribute the rest of the earnings as a dividend. The corporate tax rate is 40% and your tax rate on dividend income is 15%. How much of the earnings remains after all taxes are paid? What is the total effective tax rate? 5. In a corporation, what is the principal-agent problem? What are some ways this problem may be mitigated? 6. Who has the ultimate decision making authority in a corporation? 7. Who carries out the day-to-day management of a corporation? 8. What is the role of financial managers?

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Math 3650 – Practice Problems - Chapters 1 Answers 1. Sole Proprietorship.
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