1. If we ignore tax considerations and assume that Sally is free to sell options at any time after her joins Telstar, which compensation package is worth more? If tax consideration is ignored and assume that Ms. Jameson is free to sell options at any time after her joins Telstar.
First scenario If Ms. Jameson chooses stock options, she will hold until maturity date. Cash compensation at the end of the 5th year[1] = $5,000(1+6.02%)^5 = $6,697.44 To equal $6,697.44, the stock price must increase to at least $37.23[2] at the end of the 5th year. The stock price has to be higher than $35 in order to be exercised and make a gain, otherwise she will leave it expire worthlessly. However, from Exhibit 2, Telstar stock price has
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Jameson; thus, affect her decision on choice of compensation package. 1) Taxes If Ms. Jameson chooses stock options for her compensation, she will not need to pay taxes until she actually exercises them and sells the shares. At that point, gains on the shares will be taxed at either ordinary tax rate[3] or at capital gain tax rate[4], depending on whether she has held the stock for less than or more than one year after exercising the options. If taxes are considered, the value of option after tax will decrease. In the case that Ms. Jameson holds stocks for less than 1 year, she risks to her income tax rate that could be changed at the fifth year. While there will be no risk regarding tax rate, if she hold the stocks for more than 1 year. The latter case, however, increases risk regarding the share price in the future, in which it will have an effect on her capital gain or loss. For cash compensation package, tax consideration also decreases the value. Cash bonus is taxed at ordinary tax rate, so Ms. Jameson receive $5000 x (1-0.28) = $3,600 today, and $4,450.82[5] at the next five years. However, there is a risk that Ms. Jameson’s marginal tax rate is changed. For the worst case, tax rate might reach as high as 31%, and this results in the value of $4,265.37[6] at the end of the fifth year. 2) Dividend Although Mr. Mark told that Telstar’s stock does not
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a) Assuming the opportunity interest rate is 6%, what is the present value of the second alternative?
1. Clarissa is considering two job offers. One has an annual salary of $61.1K and the other
19) In the current year, Bonnie, who is single, sells stock valued at $60,000 to Linda for $15,000. Later that year, Bonnie gives Linda $25,000 in cash. Bonnie's taxable gifts from these transfers total
3. (TCO 2) Write the VBScript code lines that define a constant TAXRATE that is 25%, a variable basePay that is $1000, and a variable bonusPay that is $500. Calculate the net pay, and assign that value to netPay. Then, calculate the taxes, and assign that value to tax With held.
Technical Consumer Products, Inc (TCP) makes and distributes energy-efficient lighting products. Emily Bahr was TCP’s district sales manager in Minnesota, North Dakota, and South Dakota when the company announced the details of a bonus plan. A district sales manager who achieved 100 percent year-over-year sales growth and a 42 percent gross margin would earn 200 percent of his or her base salary as a bonus. Bahr’s base salary was $42,500. Her final sales result for the year showed 113 percent year-over-year sales and a 42% growth margin. She anticipated a bonus of $85,945, but TCP could not afford to pay the bonuses as planned, and Bahr received only $34,229. In response to Bahr’s claim for breach of contract, TCP argued that the bonus plan was too indefinite to be an offer.
4. If Ms. Jameson decided that the option was a better deal, but was concerned with being too committed and reliant on the fortunes of Telstar, she could modify her compensation package to better suit her individual needs. Ms. Jameson would be taking considerable risk by keeping all of her bonus in Telstar for stock options with such a lengthy expiration date and also due to the historical data of Telstar showing that only stock prices reached $35 (the exercise price) only once.
(2) Is the management fee paid to the general partner, Tambour, treated as a guaranteed payment or part of their distributive share?
The company that I have chosen for this assignment and project is Lowe 's Companies, Inc. Lowes strongly focuses on the mission statement “helping the customers to improve their homes”. The company started in 1921 as a small store in North Carolina. Great success and high demand of Lowe’s products led to an increase in the number of stores. By 1955, there were five more functional stores. Rapid growth took place around 1960s. Carl Buchan was one of the founders of Lowe’s, who died in year 1960. Exactly a year later in 1961, the company went public. This was the time when Lowe’s was given its name. Initially it was called North Wilkesboro Hardware Company. By 1979, Lowe’s established more than 50 stores in the United
In return, Helen receives 100 shares in Red Corporation. With respect to the transfers, (Points : 2)
Read the Case Study titled "Hyten Corporation" that begins on page 38 (in Part 2) in the Kerzner text. There is some reluctance within the firm to adopt formal project management processes. Suppose that you were hired as a consultant to help the management at Hyten to accept this change. Write a short report (2–3 pages, 500–800 words) that encapsulates answers to the following questions at the end of the case study: 1–7, 10–11, and 14.
As the material (Harvard Business School, 9-298-006, July 2005) tells, would CSX together with the management and the employees trust control 35,5% for the shares, and therefore would they only need 14,6% to vote in favor of the opting-out, so it would pass. Then afterward would it be possible for CSX to acquire the additional 20,3 % due to the first tier second stage, and then could their proceed with the back-end offer for the remaining 60%.
One of America’s largest forest products/paper firms with sales of $6.5Billion in 1983 and a net income of $105 million. The case study revolves around Atlantic Corporation’s intention to add linerboard capacity. In order to achieve this goal, they started looking at viable solutions, including purchasing and acquiring mill and box plants instead of through construction and fabrication of new plants and equipment. This included the possible acquisition of Royal Paper’s “crown jewels”, that is, the Monticello mill and the corrugated box plants.
3. Assuming all salaries are paid at the end of each year, what is the best option for Ben – from a strictly financial standpoint?
4. The CEO. The CEO of a midsize producer of a popular line of kitchen appliances is approached about merging with a larger company. The terms offered by the suitor are very advantageous to the CEO, who would receive a large severance package. The shareholders of the firm would also benefit, because the offer for their stock is substantially