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Q1Spr08 Soln FIN 3500

# Q1Spr08 Soln FIN 3500 - Taxes(71(142(992(1,829(2,505(3,622...

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Problem #1 Page 1 Inputs sigma(month) 13% S 55.00 sigma (annual) 45% X 50.00 T 0.5 rf 5% dt 0.0833 p 0.4832 N 6 1-p 0.5168 u 1.139 R 1.0041 d 0.878 Stock Price Lattice 0 1 2 3 4 5 6 119.98 105.35 92.51 92.51 81.23 81.23 71.33 71.33 71.33 62.64 62.64 62.64 55.00 55.00 55.00 55.00 48.30 48.30 48.30 42.41 42.41 42.41 37.24 37.24 32.70 32.70 28.71 25.21 American Put 0 1 2 3 4 5 6 0.00 0.00 0.00 0.00 0.00 0.00 0.55 0.00 0.00 1.99 1.06 0.00 4.35 3.33 2.04 0.00 6.51 5.42 3.94 9.44 8.53 7.59 13.12 12.76 17.30 17.30 21.29 24.79 Optimal Decision 0 0 0 0 = Immediate Exericise 0 0 0 1 = Wait 0 0 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 1 1 Figure 8.6, European Put 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.55 1.06 2.04 3.94 7.59 1.99 3.31 5.39 8.48 12.66 17.30 4.32 6.47 9.38 13.03 17.17 21.26 24.79

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Year 0 1 2 3 4 5 Income statement Sales 700 1,100 6,100 11,023 15,000 21,524 Costs of goods sold (350) (550) (3,050) (5,512) (7,500) (10,762) Interest payments on debt (32) (32) (32) (32) (32) (32) Interest income 6 12 24 38 53 71 Depreciation (100) (113) (124) (138) (152) (168) Profit before tax 224 417 2,918 5,379 7,369 10,633
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Unformatted text preview: Taxes (71) (142) (992) (1,829) (2,505) (3,622) Profit after tax 153 275 1,926 3,550 4,864 7,011 =-(VLOOKUP(B9*1000,\$B\$19:\$F\$24,3)+VLOOKUP(B9*1000,\$B\$19:\$F\$24,5)*(B9*1000-VLOOKUP(B9*1000,\$B\$19:\$F\$24,1)))/1000 Corporate Tax Rate Schedule Tax Calculation Range of Taxable Income Bottom Top Base tax + (Rate x amount over base bracket)- 50,000 - + 15% x amount over \$0 50,001 75,000 7,500 + 25% x amount over \$50,000 75,001 100,000 13,750 + 34% x amount over \$75,000 100,001 335,000 22,250 + 39% x amount over \$100,000 335,001 10,000,000 113,900 + 34% x amount over \$335,000 10,000,001 3,400,000 + 35% x amount over \$10,000,000 A B C D E F G H I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24...
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Q1Spr08 Soln FIN 3500 - Taxes(71(142(992(1,829(2,505(3,622...

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