Determine the marginal explicit cost

Assignment Help Econometrics

Reference no: EM131345771

Many corporations allow CEOs to use the firm's corporate jet for personal travel. The Internal Revenue Service (IRS) requires that the firm report personal use of its corporate jet as taxable executive income, and the Securities and Exchange Commission (SEC) requires that publicly traded corporations report the value of this benefit to shareholders. An important issue is the determination of the value of this benefit. The Wall Street Journal (Mark Maremont, "Amid Crackdown, the Jet Perk Suddenly Looks a Lot Pricier," May 25, 2005, A1) reports three valuation techniques. The IRS values a CEO's personal flight at or below the price of a first-class ticket. The SEC values the flight at the "incremental" cost of the flight: the additional costs to the corporation of the flight. The third alternative is the market value of chartering an aircraft. Of the three methods, the first-class ticket is least expensive and the chartered flight is most expensive.

a. What factors (such as fuel) determine the marginal explicit cost to a corporation of an executive's personal flight? Does any one of the three valuation methods correctly determine the marginal explicit cost?

b. What is the marginal opportunity cost to the corporation of an executive's personal flight?

Reference no: EM131345771

Questions Cloud

Create a gantt chart and pert diagram for the project : For project that you created a project charter, create a Gantt chart and PERT diagram for the project. The Gantt chart must have 10 high-level tasks defined with a duration, start date, end date, and dependencies.

Controlling interest groups and the media : What is James Madison's prescription for controlling interest groups and the media? Do you agree with James Madison, why or why not?

Created and sustained slavery in america : Explain how our society has been affected by the events and shaped by the ideology that created and sustained slavery in America? What impact has African American History made on our present society?

Calculate thevenin equivalent circuit as shown : The second was with a 1-kΩ load and the load voltage was 124 mV. Calculate the Thévenin equivalent circuit as shown in given Figure.

Determine the marginal explicit cost : What factors (such as fuel) determine the marginal explicit cost to a corporation of an executive's personal flight? Does any one of the three valuation methods correctly determine the marginal explicit cost?

States in terms of jim crow laws : Were there any differences between states in terms of Jim Crow Laws?

Why the implementation was either successful or not : BUS 322- Explain the scenario in each example and why the implementation was either successful or not. Compare and contrast the differences between the implementation of the change.

Created and sustained slavery in america : Explain how our society has been affected by the events and shaped by the ideology that created and sustained slavery in America?

Discuss whether agassi''s statement is reasonable : The first flight after I bought it, I took some friends to Palm Springs for lunch." (Scott Ostler, "Andre Even Flies like a Champ," San Francisco Chronicle, February 8, 1993, C1.) Discuss whether Agassi's statement is reasonable.

User Account

All Pages