Mr and Mrs Rath Invested in a Business That Will

question 25

Multiple Choice

Mr and Mrs Rath invested in a business that will generate the following cash flows over a three-year period. Use Appendix A.
If the Raths' marginal tax rate over the three year period is 20% and they use a 6% discount rate, compute the NPV of the transaction.

• A) $59,340
• B) $55,996
• C) $50,413
• D) None of the above.

Understand the legal frameworks governing employee rights and employer responsibilities.

Recognize the significance of legislative measures such as the Family and Medical Leave Act (FMLA), Fair Labor Standards Act of 1938, and workers' compensation laws.

Distinguish between different types of employment discrimination and harassment.

Understand concepts related to employment law such as employment at will and vicarious liability.

---

Definitions:

Coupon Bond

A bond that pays the holder a fixed interest rate (coupon) over the bond's lifetime and repays the principal at maturity.

Current Yield

A measure of the annual income (interest or dividends) generated by an investment, expressed as a percentage of the current market price.

Par Value

The face value of a bond or stock as stated by the issuing company, which may differ from its market value. For bonds, it's the amount to be repaid at maturity; for stocks, it's the nominal value assigned upon issuance.

Callable Bond

A type of bond that gives the issuer the right to redeem the bond at a predetermined price before its maturity date.