Graded Problems Ch 1.xlsx - Liability comparisons Merideth...

A. Sole proprietorship owned by Mr Harper means she has unlimited liability and they can come after her personal assets.
B. 50-50 partnership of Harper and Black means they will have to cover each others debts.
C. Corporation owners can not lose more than they invested.
Liability comparisons Merideth Harper has invested $25,000 in Southwest Devel-opment Company. The frm has recently decl
bankruptcy and has $60,000 in unpaid debts. Explain the nature of payments, if any, by Merideth in each of the following situa
Southwest Development Company is a sole proprietorship owned by Ms. Harper.b. Southwest Development Company is a 50–
partnership of Merideth Harper and Christopher Black.c. Southwest Development Company is a corporation.

Cash flows It is typical for Jane to plan, monitor, and assess her
fnancial position using cash flows over a given period, typically a month.
Jane has a savings account, and her bank loans money at 6% per year
while it offers short-term investment rates of 5%. Jane’s cash flows
during August were as follows:
Item Cash inflow Cash outflow Clothes -$1,000 Interest
received $ 450 Dining out
-500 Groceries -800
Salary 4,500
Auto payment -355 Utilities -280
Mortgage -1,200 Gas -222
b. Determine the net cash flow for the month of August. 593
c. If there is a shortage, what are a few options open to Jane? There is not a shortage but there d. If there is a surplus, what would be a prudent strategy for her to follow? There needs to be som

4950
800 355 280 1200 222 4357
e is excessive spending on clothes and excessive eating with groceries and dining out.
me sort of investment for retirement and she qualifes for a Roth IRA.

Marginal cost–beneft analysis and the goal of the
frm Ken Allen, capital budgeting analyst for Bally Gears,
Inc., has been asked to evaluate a proposal. The manager
of the automotive division believes that replacing the
robotics used on the heavy truck gear line will produce
total benefts of $560,000 (in today’s dollars) over the next
5 years. The existing robotics would produce benefts of
$400,000 (also in today’s dollars) over that same period. An
b. The marginal costs of the proposed new robotics. 560000 70000 490000
c. The net benefit of the proposed new robotics. 230000 490000 -260000
d. What should Ken recommend that the company do? Why? Keep the old robotics because it