Nathanial’s company developed a new machine that could sort through a stock of produced goods to identify defective ones. His co

The Net Cost of Life Insurance Premium involves the premiums paid by the insured monthly or quarterly. The insured often receives dividends from the insurance firm, thus reducing the net cost of the premium. The total premiums for 20 years can be derived from the annual premium, which is unspecified here. Consequently, I will compute for all provided options, but you should select based on the annual premium you have on hand. a) Total premium for 20 years = Annual Premium x Number of years = 11700 x 20 = 234,000 b) Total premium for 20 years = Annual Premium x Number of years = 7900 x 20 = 158,000 c) Total premium for 20 years = Annual Premium x Number of years = 550 x 20 = 11,000 d) Total premium for 20 years = Annual Premium x Number of years = 28350 x 20 = 567,000.

Answer:

NPV = $1,564.65

Explanation:

The complete question is as follows:

Hawkins Poultry Farms is evaluating the investment in feeding equipment costing $139,000 which is anticipated to generate annual cash flows of roughly $36,000 for the next five years. At the end of this duration, the equipment should be sold for $40,000.

Determine the net present value of this investment option, considering Hawkins demands a 15 percent return on capital projects

Net present value represents the current worth of after-tax cash flows generated from an investment, minus the initial investment.

NPV can be determined using financial calculations

The cash flow at year 0 is noted as $-139,000

Annual cash flow from years 1 to 4 is $36,000

Cash flow for year 5 totals $36,000 plus $40,000, equaling $76,000.

i = 15%

NPV = $1,564.65

For calculating NPV with a financial calculator:

1. Enter the cash flow figures using the CF key. After entering the data, hit enter and press the down arrow.

2. Once all cash flows are entered, select the NPV button, insert the interest rate, press enter and then use the down arrow.

3. Finally press compute.

Answer:

Staples Corporation

A schedule calculating the increase in income tax liabilities for December 31 across the years 2020, 2021, 2022, and 2023:

Year          Pre-tax         GAAP Tax-  Tax Taxable   Income Tax      Deferred

          GAAP Income  able Income    Income      Payable Expense  Liability

                  (a)                     (b)                (c)             25%       25%   (Recovery)

                                                                                of (c)      of (b)  

2020     $230,000      $200,000     $110,000  $27,500 $50,000  $22,500

2021        250,000        220,000      250,000    62,500   55,000     (7,500)

2022       240,000         210,000      240,000    60,000   52,500     (7,500)

2023       240,000         210,000      240,000    60,000   52,500     (7,500)

Total     $960,000      $840,000    $840,000  $210,000 $210,000      0

Explanation:

a) Data and Calculations:

Cost of the depreciable asset = $120,000

Estimated useful life = 4 years

Residual value = $0

Tax depreciation expense = 100% for 2020

GAAP depreciation expense = 25% for 2020, 2021, 2022, and 2023

Tax rate for each year = 25%

Year          Pre-tax         GAAP Tax-  Tax Taxable   Income Tax      Deferred

          GAAP Income  able Income    Income      Payable Expense  Liability

                  (a)                     (b)                (c)             25%       25%   (Recovery)

                                                                                of (c)      of (b)  

2020     $230,000      $200,000     $110,000  $27,500 $50,000  $22,500

2021        250,000        220,000      250,000    62,500   55,000     (7,500)

2022       240,000         210,000      240,000    60,000   52,500     (7,500)

2023       240,000         210,000      240,000    60,000   52,500     (7,500)

Total     $960,000      $840,000    $840,000  $210,000 $210,000      0

Tax Taxable Income for 2020 = $110,000 ($230,000-$120,000)

GAAP Taxable Income = GAAP minus annual depreciation

b) Tax Taxable Income equals GAAP income of $230,000 less 100% depreciation ($120,000) for the first year and 0% for the following years. This results in temporary differences in 2020 between the calculated tax payable and the tax expense for later years. Although there was a tax obligation established in the first year, it is counterbalanced in the years that follow.

Complete Question:

James Stilton serves as the CEO of RightLiving, Inc., a corporation that purchases life insurance policies at a reduced price from terminally ill individuals and sells them to investors. RightLiving compensates terminally ill patients with a percentage of the future death benefits (typically 65%) and subsequently sells the policies to investors for 85% of the future benefit amount. The patients receive funds to assist with their medical and other expenses, while the investors are assured a positive return on their investments. The difference between the purchase and retail prices represents RightLiving's profit.

Stilton is aware that some sick patients might acquire insurance policies through deceit (by concealing their illness on the application). If an insurance company uncovers such fraud, it will annul the policy and withhold payment. While Stilton is confident that most of the policies he has acquired are legitimate, he recognizes that a few may not be.

Requirement:

What additional ethical dilemmas might Stilton encounter?

Answer with Explanation:

Stilton's ethical challenges include:

• Should he disclose potential fraud to investors prior to executing sales?
• What policies should be established to ensure that legitimate individuals can easily sell their policies, and how would lack of such policies be unfair for RightLiving, Inc.?
• Stilton also faces ethical issues because the business model benefits from the early deaths of clients, which raises moral questions.

Answer: $36,000 loss

Explanation:

Initial cost = $250,000

Shipping fees = $3,500

Setup fees = $2,500

Annual maintenance = $5,000

Depreciation amount = $25,000

Proposed selling price = $200,000

Total costs involved = $(250,000 + 3,500 + 2,500 + 5,000)

Total costs involved = $261,000

Depreciation amount = $25,000

Equipment's book value = $261,000 - $25,000 = $236,000

Calculating gain/loss = Book value - selling price

Gain/loss = $236,000 - $200,000

$36,000 loss