Instruction 6-4 John Has Two Jobs.For Daytime Work at a Jewelry Store

question 72

Short Answer

Instruction 6-4
John has two jobs.For daytime work at a jewelry store he is paid $15,000 per month,plus a commission.His monthly commission is normally distributed with mean $10,000 and standard deviation $2,000.At night he works as a waiter,for which his monthly income is normally distributed with mean $1,000 and standard deviation $300.John's income levels from these two sources are independent of each other.
-Referring to Instruction 6-4,for a given month,what is the probability that John's commission from the jewelry store is no more than $8,000?

Determine the guaranteed rate of return on an investment given the investment amount and withdrawal plan.

Understand and apply the concept of net present value in evaluating investment projects.

Calculate the income tax expense and net cash flows from capital budgeting projects.

Understand the treatment of working capital in net present value analysis.

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Definitions:

Taxable Income

The amount of income that is subject to income tax after deductions and exemptions.

Corporate Income Tax Rate

The percentage of corporate profits that are paid to the government as income tax.

Interperiod Tax Allocation

The accounting practice of distributing income taxes equally among the different periods affected by temporary differences.

Warranty Expenses

Costs that a company anticipates or incurs due to the repair or replacement of defective products under warranty.