15. Lucia bought 500 shares of stock eleven months ago for $12 per share and just sold it for $8
per share. Last month, she received a dividend check for $500. What is Lucia’s holding period
return?
16. Assumptions of the mean-variance criteria of portfolio selection require that investors:
1.
2.
3.
4.
Corporate Tax Rates
Taxable Income($)
Marginal Tax Rate
Tax Calculation
Up to 50,000
15%
$0 + (15% Amount over $0)
50,001-75,000
25%
$7500 + (25% Amount over $50,000)
75,001-100,000
34%
$13,750 + (34% Amount over $75,000)
100,001-335,000
39%
$22,250 + (39% Amount over $100,000)
335,001-10,000,000
34%
$113,900 + (34% Amount over $335,000)
10,000,001-15,000,000
35%
$3,400,000 + (35% Amount over $10,000,000)
15,000,001-18,333,333
38%
$5,150,000 + (38% Amount over $15,000,000)
Over 18,333,333
35%
35% x Taxable Income
17. XYZ Corporation had operating income of $200,000, received $8,000 in interest income,
paid $12,000 in interest, received $20,000 in preferred dividends, and paid $3000 in common
dividends. What was the firm’s
tax liability
?
18. Ms. Foxille plans to retire in 28 years. She wants to be able to withdraw $250,000 at the end
of each year for 35 years during retirement.
How much must she contribute each year to her
retirement savings over the next 28 years assuming her account earns 7 percent per year?
19. What is the effective rate of interest on an account that pays a nominal rate of 9 percent with
interest compounded continuously?
20. What is the value in eight years of a $60,000 college fund if the nominal rate of interest is 4
percent compounded monthly?
21. What is the value of the following cash flow stream if the appropriate discount rate is 8
percent?
Year
Cash Flow
1
$2000
2
0
3
3000
4
8000
5
5000
2