Reference no: EM133119992

Answer the following:

1. Franklin Stewart arrived at the following tax information: Gross salary, $47,780 Interest earnings, $225 Dividend income, $80 Basic personal amount, $9600; Deductions, $3,890 Other losses, $1,150 What amount should Franklin report as taxable income?

2. a. What is the annual opportunity cost of a chequing account that requires a $350 minimum balance to avoid service charges? Assume an interest rate of 6.5 percent.

b. What would be the net annual cost of the following chequing accounts?

i. Monthly fee, $3.75; processing fee, 25 cents per cheque; cheques written, an average of 22 a month.

ii. Interest earnings of 6 percent with a $500 minimum balance; average monthly balance, $600; monthly service charge of $15 for falling below the minimum balance, which occurs three times a year (no interest earned in these months).

3. Based on the following information; determine the true balance of your chequing account. Balance in your chequebook, $356 Balance on bank statement;, $472 Service charge and other fees, $15 Interest earned on the account, $4 Total of outstanding cheques, $187 Deposits in transit, $60

4. Dinesh Dani flew to Toronto to attend his brother's wedding. Knowing that his family would be busy, he did not ask anyone to meet him at the airport. Instead, he planned to rent a car to use while in Toronto. He has no nationally known credit cards but is prepared to pay cash for the rental car. The car rental agency refuses to rent him a car, even though the agency has several cars available. Why do you think Dinesh is unable to rent a car?

5. Juan Villavera, a recent college graduate, has accepted a teaching position at Brockville High School. Juan moved to Brockville and applied for a car loan at the Royal Bank. He had never used credit or obtained a loan. The bank notified him that it will not approve the loan unless he had a co-signer. On what basis has the bank denied Juan credit?

6. Friedrich Reine has had a student loan, two auto loans, and three credit cards. He has always made timely payments on all obligations. He has a savings account of $2,400 and an annual income of $25,000. His current payments for rent, insurance, and utilities are about $1,100 per month. Friedrich has accumulated $12,800 in an individual retirement account. Friedrich's loan application asks for $10,000 to start up a small restaurant with some friends. Friedrich will not be an active manager; his partner will run the restaurant. Will he get the loan? Explain your answer.