HallHomework1

HallHomework1 - FI360: Week 1 Homework Randall Hall...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
FI360: Week 1 Homework Randall Hall Professor Trevino, I took this class previously, so I had some of the homework already done, and some of these answers are a copy from that previous work. I hope it is formatted and structured how you want it, and the answers meet your expectations. Thanks, Randy Problem 1-1 If the firm is organized as a partnership, operating income will be taxed only once, so investors will receive $500,000 x (1-0.45) = $275,000. If the firm is organized as a corporation, operating income will be taxed once at the corporate level and again at the personal level, so investors will receive only $500,000 x (1- 0.36)(1-0.45) = $176,000. The “corporate tax wedge” is thus $99,000, or 19.8 percentage points. Using the pre-1981 tax rates, partnership investors would receive a net $150,000 of operating income, while corporate stockholders would be able to keep only $75,000 of the $500,000 in operating income. Problem 2-2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/10/2011 for the course FI 360 taught by Professor Tavbin during the Fall '08 term at Park.

Page1 / 2

HallHomework1 - FI360: Week 1 Homework Randall Hall...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online