Compute net present value of the after-tax cash flow

Assignment Help Business Management
Reference no: EM131073429

Melinda has been offered two competing employment contracts for the next two years. Argus Corporation will pay her a $75,000 salary in both years 1 and 2. Dynamic Corporation will pay Melinda a $100,000 salary in year 1 and a $49,000 salary in year 2. Melinda expects to be in the 25 percent marginal tax bracket in year 1 and in the 33 percent marginal tax bracket in year 2 (due to a significant amount of income from new rental properties). She does not expect either offer to change her marginal tax bracket for either year. Both Argus Corporation and Dynamic Corporation expect their marginal tax brackets to remain at 34 percent over the two-year period and expect that employment tax rates will remain the same.

a. Compute the net present value of the after-tax cash flow for Melinda and after-tax cost for Argus and Dynamic for each of the proposed employment contracts using a 6 percent discount rate.

b. Which alternative is better for Melinda and which is better from the corporation's perspective?

Reference no: EM131073429

Questions Cloud

Pros and cons of hiring process for uber driver : Pros and Cons for Hiring Process of Uber Office Worker and Pros and Cons of Hiring process for Uber Driver.
Determining the contextual investigation : 1. Make a rundown of the distinctive difficulties you've encountered to advancing wellbeing preparing, and figure out whether there are any shared traits amongst your gathering. 2. Talk about the distinctive techniques you've utilized as a part of ..
Discuss the criteria to consider in specifying the structure : Identify the data that should be incorporated into CGC's new system to provide adequate planning capability. Explain why each data item it is important and the level of detail needed for the data to be useful.
What total amount of tootsie rolls assets for current year : What was the total amount of Tootsie Roll's assets for the most current year available? What was the total amount of Tootsie Roll's liabilities for the most current year available?
Compute net present value of the after-tax cash flow : a. Compute the net present value of the after-tax cash flow for Melinda and after-tax cost for Argus and Dynamic for each of the proposed employment contracts using a 6 percent discount rate. b. Which alternative is better for Melinda and which i..
The steel framework shown below at minimum cost : Submit your exam as a single Excel workbook with each problem on a separate worksheet. Please include text boxes providing a verbal summary of any main conclusions drawn from each problem.
Worker preparation arrangement : As a gathering, consider 5 top character characteristics you would search for in a qualified coach. Answer: Connection abilities, experience, drawing in, imaginative, proficient, quiet, fun. While sorting out another worker's preparation arrangeme..
Non-standard bond to raise capital : Standard Oil issued a non-standard bond to raise capital in the following way. At the bond’s maturity the company promised to pay $1,000 plus an additional amount based on the price of oil at that time. What are the two option positions required to r..
Describes the general strategic behind deadlock prevention : Describes the general strategic behind deadlock prevention

Reviews

Write a Review

Business Management Questions & Answers

  Calculating the present value of future cash flows

Calculating the Present Value of Future Cash Flows. A financial company advertises on television that they will pay you $60,000 now in exchange for annual payments of $10,000 that you are expected to receive for a legal settlement over the next 10 ye..

  Dynamic or transformational company

Select a dynamic or transformational company whose response to changing market conditions indicates the companys leadership style has evolved to guide the organization.

  Various components of pandora business

What are the various components of Pandora's business? What are some shortcomings of downloading music?

  Examine the data and using the appropriate control chart

Examine the data and using the appropriate control chart determine whether the system is in control.

  Employee involvement benefits and limitations

What are your thoughts on employee involvement? In what types of situations should they be involved? It's obviously unreasonable, and sometimes inappropriate, for them to be involved in all decision making. Where should managers draw the line?

  Discuss some potential ethical mishandlings

Classify also discuss some potential ethical mishandlings when it comes to cross selling, like targeting a demographic more likely to accept the suggested purchase like the elderly.

  Financial policy formulation and business strategy

Financial Policy Formulation and Business Strategy - Analyze the following in terms of how they are used in financial policy formulation and business strategy

  Productivity measurement important to ncl

How would you measure productivity at NCL? Is productivity measurement important to NCL? Be very specific with your response. Try to determine the implications of any productivity measure that you propose.

  Destroying traditional conceptions

What is the major reason that the Internet has such potential for destroying traditional conceptions and implementations of intellectual property law?

  Portable fun instruments

Portable Fun Instruments Yash Gupta is the founder and president of Portable Fun Instruments (PFI), a company that has had great success in the handheld game market.

  Find the terminal stock price using a benchmark pe ratio

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1...

  Porters three generic strategies

What are Porter's three generic strategies and how can a company add value by using Porter's chain analysis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd