Mission Company Has Three Employees $\text { The company is subject to the following taxes: }$

question 78

Multiple Choice

Mission Company has three employees:
$\begin{array}{lrr}&\text { Gross Pay through July }&\text { Gross Pay for August }\\\text { Smith } & \$ 3,200 & \$ 1,000 \\ \text { Cain } & 25,800 & 3,500 \\ \text { Clark } & 94,600 & 13,100\end{array}$

$\text { The company is subject to the following taxes: }$
$\begin{array} { l c l } \text { Tax } & \text { Rate } & \text { Applied To } \\ \text { FICA-Social Security } & \mathbf { 6 . 2 0 \% } & \text { First } \$ 106,800 \\ \text { FICA-Medicare } & 1.45 & \text { All grosspay } \\ \text { FUTA } & \mathbf { .8 0 } & \text { First } \$ 7,000 \\ \text { SUTA } & 5.40 & \text { First } \$ 7,000 \end{array}$

What are Mission Company's total August payroll taxes for Smith?

• A) $ 62.00
• B) $138.50
• C) $443.20
• D) $581.70
• E) $76.50

Analyze the trade-offs between short-term and long-term financing decisions.

Understand the terms and conditions of different types of short-term credit agreements.

Recognize the advantages and disadvantages of various short-term funding options.

Learn the role and significance of trade credit in working capital management.

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Definitions:

Risk-Free Asset

An investment that is expected to return its principal and interest with near certainty, such as government bonds from stable countries.

Risky Asset

An investment that has a significant degree of uncertainty in its returns.

Asset Allocation

The process of spreading investments among various categories of assets (e.g., stocks, bonds, real estate) to optimize risk and return.

Risk Tolerance

The degree of variability in investment returns that an investor is willing to withstand.