Fi515 Homework 1

1685 Words7 Pages
FI515
Homework#1
Ashley Wright

Problems pg 79:
2-6
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the year?
Dividend = $780 million + $50 million - $810 million= $830 million - $810 million= $20 million
2-7
The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What are the firm’s in- come tax liability and its after-tax income? What are the company’s marginal and average tax
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Some disadvantages will be double taxation and the amount of federal/state reports that required by the law to be completed that’s much more complicated as well. C) A company goes public when it sells stock to the public in an initial public as the firm grows, it might issue additional stock or debt. An agency problem occurs when the managers of the firm act in their own self interests and not in the interests of the shareholders. D) Should be the corporation’s primary goal which is stockholder wealth maximization. 1. Firms have an ethical responsibility to provide a safe working environment, to avoid polluting the air or water, and to produce safe products. The most significant cost-increasing actions will have to be put on a mandatory to ensure that the burden falls uniformly on all businesses. 2. The same actions that maximize stock prices also benefit society. Stock price maximization requires efficient, low-cost operations that produce high-quality goods and services at the lowest possible cost. Stock price maximization requires the development of products and services that consumers want and need, so the profit motive leads to new technology, to new products, and to new jobs 3. Yes. Most executives believe that there is a positive correlation between ethics and long-run profitability. Conflicts often arise between profits and ethics. Companies must deal with these conflicts on

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