Tapley dental supplies inc. is in a stable, no-growth situation. its $1,000,000 of debt consists of perpetuities that have a 10% coupon and sell at par. tapley's ebit is $500,000, its cost of equity is 15%, it has 100,000 shares outstanding, all earnings are paid out as dividends, and its federal-plus-state tax rate is 40%. tapley could borrow an additional $500,000 at an interest rate of 13% without having to retire the original debt, and it would use the proceeds to repurchase stock at the current price, not at the new equilibrium price. the increased risk from the additional leverage will raise the cost of equity to 17%. if tapley does recapitalize, what will be the new stock price?

Martinez company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 pretax financial income $873,000 $866,000 $947,000 (2017' 2018, 2019) excess depreciation expense on tax return (29,400 ) (39,000 ) (9,600 ) (2017' 2018, 2019) excess warranty expense in financial income 20,000 9,900 8,300 (2017' 2018, 2019) taxable income $863,600 $836,900 $945,700(2017' 2018, 2019) the income tax rate for all years is 40%. instructions: a. prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. b. assuming there were no temporary differences prior to 2016, indicate how deferred taxes will be reported on the 2016 balance sheet. button's warranty is for 12 months. c. prepare the income tax expense section of the income statement for 2017, beginning with the line, "pretax financial income."

Garrett is an executive vice president at samm hardware. he researches a proposal by a larger company, maximum hardware, to combine the two companies. by analyzing past performance, conducting focus groups, and interviewing maximum employees, garrett concludes that maximum has poor profit margins, sells shoddy merchandise, and treats customers poorly. what actions should garrett and samm hardware take? a. turn down the acquisition offer and prepare to resist a hostile takeover. b. attempt a friendly merger and use managerial hubris to improve results at maximum. c. welcome the acquisition and use knowledge transfer to impart sam hardware's management practices. d. do nothing; the two companies cannot combine without samm hardware's explicit consent.

With the slowdown of business, how can starbucks ensure that the importance of leadership development does not get overlooked?