User Account

All Pages

What are the tax impacts

Assignment Help Financial Management
Reference no: EM13879399

Jurden WIndows Inc. hired JUstin, a new sales VP, two years ago. Justin is 51. In the words of the company CEO, Justin has "taken the company to the moon." He has used his contacts in the industry to cherry-pick the best salespersons and to put together a sales effort that has everyone talking. That's the good news. The scary news is that everyone wants Justin and his sales team, whose loyalty is more to Justin than to the company. Bottom line: the company needs to lock Justin up.

The CEO of the Co. knows that Justin, a big spender, is concerned about his retirement down the road. The CEO doesn't know much about Justin's financial situation, but suspects that Justin doesn't save and invest much. Justin has inquired on a number of occasions if something can be done to enhance the company's retirement plan, which is a vanilla 401(k) plan that puts the funding onus on the employee.

The CEO would like to adopt a special retirement plan just for Justin. Ideally, it would be a plan that would bind Justin to the Co for the duration. The CEO has many questions: i sushc a plan for one person legal? What are the tax impacts? How would the benefits under the plan be funded? The CEO feels strongly that the plan must offer Justin more than just a "naked promise" down the road. There needs to be "some teeth" to show that the benefits will be paid. Plus, the CEO says it "can't create a bunch of tax problems for Justin before he starts collecting follow his retirement from the company." Advise the company.

Reference no: EM13879399

Questions Cloud

Bonds issued-what is the yield to maturity : The 7 percent bonds issued by Modern Kitchens pay semiannually, mature in eight years, and have a $1,000 fac value. Currently, the bonds sell for $1,032. What is the yield to maturity?
Supplier-customer relationship : The category of business combination where the firms have a supplier-customer relationship is known as a ___.
Using option equivalents from common stock and borrowing : Your group has been assigned task of determining what value to place on call option for your firm. The current stock price per share is $54.52. Six months from now management believes the stock price will either fall by 25% or rise by 33%. Using opti..
Risky should have to earn internal rates of return : To be accepted, projects that are unusually risky should have to earn Internal Rates of Return that are ____ those earned by a firm’s typical projects.
What are the tax impacts : Jurden WIndows Inc. hired JUstin, a new sales VP, two years ago. Justin is 51. In the words of the company CEO, Justin has "taken the company to the moon."  The CEO would like to adopt a special retirement plan just for Justin. Ideally, it would be a..
Expert in finance assess logic of his investment strategy : A University Professor observed that the news program “60 Minutes” had done over 30 adverse news stories on NYSE listed companies in the past five years. How would you as an expert in finance assess the logic of his investment strategy?
What is the real rate of return on this bond : A bond that pays interest annually yields a rate of return of 7.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?
What is the present value of this commitment : When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star c..
Compute the price of bonds based on semiannual analysis : Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 11 percent and the interest is paid semiannually. The yield to maturity on the bonds is 14 percent annual interest. ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is estimate of appropriate stock price-price–sale ratio

TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $1.5 million and there are 120,000 shares outstanding. If the benchmark price–sales ratio is 4, what is your estimate of an appropriate stock price. What i..

  What is the expected return on the portfolio after purchase

Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio.  Company D's has an expected return of 9.0% and a beta of .75. The total value of the inv..

  Using the profitability index- after-tax inflows

A company is using the Profitability Index (PI) when evaluating projects. You have to find the PI for the company's project, assuming the company's cost of capital is 9.5%. The initial outlay for the project is $379,000. The project will produce the ..

  Changes in sales cause changes in profits

Changes in sales cause changes in profits. Would the profit change associated with sales changes be larger or smaller if a firm increased its operating leverages?  Should the asset investment and financing decisions be jointly determined, or should e..

  Review the financial statements of merck and novartis

Review the financial statements of Merck and Novartis to learn additional information. The emphasis of this Case is to review the income statement, balance sheet and computation of ratios.

  Sensitivity of bond prices to changes in interest rates

For a given coupon rate, the sensitivity of bond prices to changes in interest rates increases at an increasing rate as maturity increases. What are the duration and modified duration of a seven-year, 3.5 percent coupon rate, annual coupon payment, $..

  Example of a performance measure

What does the phrase you get what you measure refer to? Give an example of a performance measure you’ve come across in your experience (work, school, or home) and comment on the strengths and weaknesses of that measure.

  Create business plan outline-fixed and variable costs

Create a BUSINESS PLAN OUTLINE for a Brewing company in California. The Economics of the Business. Revenue Drivers and Profit Margins. Fixed and Variable Costs. Operating Leverage, and Its Implications

  Equity requirement-what is the value of a property

If the equity requirement is 12 percent and a mortgage can be obtained for 25 years at 7 percent. If the loan to value ratio is 70 percent (equity is 30 percent), what is the value of a property that generates $125,000 in net operating income.

  Calculate the change in the call options value

What would be the price of a 91-day European-style put option on ARB stock having the same exercise price? Calculate the change in the call option’s value that would occur if ARB’s management suddenly decided to suspend dividend payments and this act..

  Government bonds-corporate bonds and municipal bonds

Please sort the level of risk, liquidity and return of that bond on the list: Government Bonds, Corporate Bonds, Municipal Bonds, Foreign Bonds and Financial bonds.

  Frequently borrow money under an arrangement

Companies frequently borrow money under an arrangement that requires them to make periodic payments of only interest and then pay the principal of the loan all at once. A company that manufactures odour control chemicals borrowed $400,000 for 3 years..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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