1. Emily recently graduated with a B.A. in economics and was offered a job with a small but growing company for $38 400 per year. About the same time, Emily inherited $60 000. She decided to pass up the job and use her inheritance to purchase a bubble tea shop rather than put the money into a bond fund (as her uncle suggested), which would have paid 5 percent per year interest. Emily works full-time at her new business, and at the end of the year she had revenues of $81 000 and total explicit costs of $42 000. What was Emily's accounting profit or loss for the year?

Bella Wans is interested in buying a new motorcycle. She has decided to borrow the money to pay the $25,000 purchase price of the bike. She is in the 33% income tax bracket. She can either borrow the money at an interest rate of 7% from the motorcycle dealer, or she could take out a second mortgage on her home. That mortgage would come with an interest rate of 9%. Interest payments on the mortgage would be tax deductible for Bella, but interest payments on the loan from the motorcycle dealer could not be deducted on Bella's federal tax return. a. Calculate the after-tax cost of borrowing from the motorcycle dealership. b. Calculate the after-tax cost of borrowing through a second mortgage on Bella's home. C. Which source of borrowing is less costly for Bella? d. Should Bella consider any other factors when deciding which loan to take out?

4. Priscilla, age 57, had contributed $60,000 over the years to her employer sponsored 401k Roth plan. She is now retired and her 401k Roth is now worth $400,000. The Roth Account was set up 10 years ago. Priscilla wants to see the country in her retirement and withdraws $100,000 to purchase a RV camper. This is her first withdrawal from the account. She is in the 24% marginal tax bracket. How much of the $100,000 withdrawal will Pricilla have to purchase the camper after she pays tax (if any) and penalties (if any)?

Amanda Weet who is six years old has been gifted $100,000 (after-tax) towards a college fund. Her parents do not have the ability to add any other amounts to the fund and a good four-year college education will cost about $71,000 per-year in ten years from now. What rate of return should she earn to be able to withdraw $71,000 at the end of 10th, 11th, 12th, and 13th year respectively. (Hint: IRR problem, draw a time line)

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Jenny's net worth increased from $600,000 to $750,000 this year.  During the year, she inherited $50,000 in stocks and bonds.  Jenny earned a salary of $80,000 and saved $10,000 of her salary in her 401(k) plan.  Jenny contributed $3,000 to her IRA from her checking account.  She also used $5,000 from her money market to purchase new bedroom furniture.  Her investments grew by $75,000.  Assuming these are all of her transactions, what was the principal reduction on her mortgage? $5,000 $10,000 $15,000 $20,000 $25,000

Sophie Lopez is a 72-year-old widow who has recently been diagnosed with Alzheimer’s disease. She has limited financial assets of her own and has been living with her daughter Felicity for two years. Her income is $850a month in Social Security survivor’s benefits. Felicity wants to make surethat her mother will be taken care of if Felicity should die prematurely. Felicity, 40, is single and earns $55,000 a year as a human resources manager for a small manufacturing firm. She owns a condo with a current market value of $100,000 and has a $70,000 mortgage. Other debtsinclude a $5,000 auto loan and $500 in various credit card balances. Her 401(k) plan has a current balance of $24,500, and she keeps $7,500 in a money market account for emergencies. After talking with her mother’s doctor, Felicity believes that her mother will be able to continue living independently for another two to three years. She estimates that her mother would need about $2,000 a month to cover her living…

Charlene, a chemist, worked in a chemistry lab and earned $60,000 per year. Charlene quit in order to start her own business. To buy the necessary equipment, she withdrew $50,000 from her savings, (which paid two percent interest per year) and borrowed $60,000 from her Aunt Bea, whom she pays five percent interest per year. Last year she paid $48,000 for ingredients and paid all of the interest on the loan from her aunt. She had revenue of $124,000. For last year, Alvin, the accountant, says Charlene’s profit is ________ and Emily the economist, says Charlene’s profit is ________. $76,000; $12,000 $73,000; $14,000 $73,000; $12,000. $73,000; $13,000. $72,000; $13,000.

Your parents have accumulated a $120,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nail salon. Your parents are giving Courtney $15,000 to help her get started, and they have decided to take year-end vacations costing $10,000 per year for the next four years. How much money will your parents have at the end of four years to help you with graduate school? You plan to work on a master's and perhaps a PhD. If graduate school costs $26,353 per year, approximately how long will you be able to stay in school based on these funds? Use 9 percent as the appropriate interest rate throughout this problem. Round all values to whole numbers. Refer to this information to solve the rest of the questions. What are the funds available after the Nail Salon? ○ $100,000 ○ $105,000 ○ $72,000 $98,500 What is the Present Value of the vacations? $32,397 $37,900 $45,000…

Mavis never went to university, so when her daughter, Charita was to go to university, Mavis wanted to ensure that she had sufficient savings. Charita starts university tomorrow. Mavis' goal is for savings today that cover four years of $25,000 per year for tuition (to be paid at the beginning of the year), plus a lump sum of $50,000 available at the beginning of the 5th year to cover further studies. How much does Mavis have in available funds, assuming a discount rate of 7%, compounded semi-annually? Question 8Select one: a. $128,431 b. $ 122,417 c. $125, 907 d. $124, 695