On the internet and in the news you see many articles on non-profit companies and their contribution rates. For example, let us say that a firm returns 20% of its contributions to research and pays its CEO $700,000 per year I Is this reasonable? How does this compare to other not for profit entities? (C)

On the internet and in the news you see many articles on non-profit companies and their contribution rates. For example, let us say that a firm returns 20% of its contributions to research and pays its CEO $700,000 per year I Is this reasonable? How does this compare to other not for profit entities? (C)

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 31P

See similar textbooks

Similar questions

On the internet and in the news you see many articles on non-profit companies and their contribution rates. For example, let us say that a firm returns 20% of its contributions to research and pays its CEO $700,000 per year. Is this reasonable? How does this compare to other not for profit entities?
Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizeable web development firms in Colorado. Bubbles offers a 401(k)/profit sharing plan. The plan has the following characteristics: Eligibility: age 21 and one-year of service Match: dollar for dollar match Vesting: 20% per year (years 1 through 9) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. The plan permits rollovers from other qualified plans and IRA EE# Employee Ownership Age Tenure Salary Deferral 1 Mark 60% 48 20 Years $200,000 $10,000 2 Jeff 30% 49 20 Years $150,000 $15,000 3 Chad 6% 33 15 Years $75,000 $5,250 4 Josh 4% 42 10 Years $85,000 $5,100 5 Alex 0% 58 8 Years $60,000 $0 6 Shay 0% 29…
Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizeable web development firms in Colorado. Bubbles offers a 401(k)/profit sharing plan. The plan has the following characteristics: Eligibility: age 21 and one-year of service Match: dollar for dollar match Vesting: 20% per year (years 1 through 5) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. The plan has been amended to permit in-plan Roth rollovers. The plan permits rollovers from other qualified plans and IRAs EE# Employee Ownership Age Tenure Salary Deferral 1 Mark 60% 48 20 Years $200,000 $10,000 2 Jeff 30% 49 20 Years $150,000 $15,000 3 Chad 6% 33 15 Years $75,000 $5,250 4 Josh 4% 42 10 Years $85,000 $5,100 5…
Tech Star Ltd is evaluating its CEO's performance last year.The net income earned is 1.2 million.The company invested in three projects worth 4 million,2 million and 8 million respectively.The risk free rate is 1%.Market beta is estimated at 1.2 and the market risk premiumis 5%.The company has no debt financing.What is the CEO's economic value added(EVA)? A.0.220 million B.0.388 million C.None of the choices D.The CEO has 0 economic value added
To generate leads for new business, Gustin Investment Services offers free financial planningseminars at major hotels in Southwest Florida. Gustin conducts seminars for groupsof 25 individuals. Each seminar costs Gustin $3,500 and the average first-year commissionfor each new account opened is $5,000. Gustin estimates that for each individualattending the seminar, there is a 0.01 probability that he/she will open a new account. a. Determine the equation for computing Gustin’s profit per seminar, given values of therelevant parameters.
Nike Enterprises sells widgets for $10 a piece which cost them $6 to make. In a good year (probability 50%), the company sells 150,00 widgets and in a bad year only 100,000. The company faces fixed costs of $200,000. The company can borrow at 8% and the unlevered equity ahs a required rate of return of 12%. The company now has a 30% tax rate. 1. Populate a very basic pro-forma income statement for the bad and the good year for the unlevered firm. 2. Compute the value of the unlevered firm under the perpetuity assumption. 3. Adjust the pro-forma statements under the assumption that the firm takes on $1.25m of perpetual debt. 4. Compute the value of the levered firm and the value of the levered equity.
Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $1,000,000 in a start-up firm. He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year’s operations of the two firms he is considering and give him some business advice. Company Name Larson Benson Variable cost per unit (a) $ 18.00 $ 9.00 Sales revenue (8,900 units × $29.00) $ 258,100 $ 258,100 Variable cost (8,900 units × a) (160,200 ) (80,100 ) Contribution margin $ 97,900 $ 178,000 Fixed cost (24,700 ) (104,800 ) Net income $ 73,200 $ 73,200 Required Use the contribution margin approach to compute the operating leverage for each firm. If the economy expands in coming years, Larson and Benson will both enjoy a 11 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for…
The P&G Pakistan is a big and mature company. Most of business graduates look to work in it. Company periodically hires internees for period of 6 months on trial basis. Suppose you are selected as an internee. The Financial has given you following data to test your finance skills. (Marks 5) Year Project A Project B Project C 0 (170,000) (18,000) 20,000 1 11,000 10,000 7,000 2 24,000 6,000 7,000 3 25,000 10,000 7,000 4 380,000 8,000 7,000 If you apply the IRR criterion, which project will you choose? If you apply profitability index criterion, which investment would you choose? Why?
Corporate Finance A pharmaceutical Startup has an annual cost of capital of 12% (compounded monthly) andgoes through two stages to develop a drug.Stage 1: At End of Month 0 (“EOM0”), the Startup has no employees, and has to decide whether toinvest $10mm and hire 5 employees (who will conduct research). (Employees receive $9,000monthly salary, paid at the end of each month that they work, so they begin receiving salariesstarting at EOM1.If the startup decided to invest at EOM0 and hired employees, then:Stage 2: at EOM24, after knowing whether the Startup is in State A, B or C , the Startup has to decidewhether to invest $35mm at EOM24 and add 40 employees (for a total of 45) OR to shut down. Ifthe Startup decides to shut down, then existing employees will be fired “with 6 months notice” i.e.they will receive 6 more months of salary (i.e. at EOM25, EOM26, … EOM30). Note that: at EOM0the startup believed that at EOM24 there would be:95% prob of State A: the startup thinks that at EOM48…
You have a great idea and are raising money to fund your company. Your investment banker convinces you that you can raise $1mm now for 20% of the company. Your family invested $100,000 last year for 25% of the company. You have no revenue and no income yet. What is the updated equity valuation of your company? $1.1mm zero $5.1mm $250,000 $5mm
Suppose you have a company that produces and sells shoes: The cost of producing 6,000 pairs of shoes is $81,500 and 16,000 pairs of shoes for $165,000. each pair produced can be sold for $21; There is a website where your shoes can be viewed. The traffic on website is a variable amount, and each view view generates $0.005; The employees are paid 15% of the profit function; The director wants monthly deposits to save $5,000,000 at 5.10% in 30 years; and Additional money is saved for your position for only the first month. You want to make $250,000 at 5.70% compounded continuously for 20 years.Leading Question: How would you represent the above situation? Suppose in the first month, you sold 10,000 pairs of shoes, and half a million views on the website. What is the first month's outcome? How does the second month's model differ from the first month? Suppose for the second month, you had zero views on the website. Find how many shoes are needed to break even for the second month's…
The P&G Pakistan is a big and mature company. Most of business graduates look to work in it. Company periodically hires internees for period of 6 months on trial basis. Suppose you are selected as an internee. The Financial has given you following data to test your finance skills. Year Project A Project B Project C 0 (170,000) (18,000) 20,000 1 11,000 10,000 7,000 2 24,000 6,000 7,000 3 25,000 10,000 7,000 4 380,000 8,000 7,000 If you apply the IRR criterion, which project will you choose?