Problem 12-28 (LO 12-2) (Static)[The following information applies to the questions displayed below.]Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $15 pershare). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $15 per share. Yostexercised all of his options when the share price was $26 per share. Two years after acquiring the shares, he sold them at$47 per share.Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.Problem 12-28 Part d (Static)d. Assume that Yost's options were exercisable at $20 and expired after five years. If the stock only reached $18 during its high pointduring the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold,assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent?Grant dato -Exercise dateSale dateTaxes Due00$$ 27,3005 12,600Ask Jasper

It is the increase or decrease in the value of an asset at a given date or time in comparison to its…

Answered: Yost received 300 NQOs (each option…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 12-28 (LO 12-2) (Static) [The following information applies to the questions displayed below] Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $15 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $15 per share. Yost exercised all of his options when the share price was $26 per share. Two years after acquiring the shares, he sold them at $47 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. Problem 12-28 Part b (Static) b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? Grant date Exercise date: Sale date: Amount of Tax Savings Deduction $ $ $ OS 11,550 $ 0 $ 0 12,600 0
! Required information Problem 12-31 (LO 12-2) (Static) [The following information applies to the questions displayed below.] Antonio received 40 ISOs (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share) at the time he started working for Zorro Corporation six years ago. Zorro's stock price was $3 per share at the time. Now that Zorro's stock price is $50 per share, Antonio intends to exercise all of his options and immediately sell all the shares he receives from the options exercise. Note: Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable. Problem 12-31 Part b (Static) b. What are Zorro's tax consequences on the grant date, the exercise date, and the date Antonio sells the shares? X Answer is complete but not entirely correct. Grant date Exercise date and sale date Tax Benefit $ $ 0 0X Return to que
Required information [The following information applies to the questions displayed below.] Yost received 300 NQOs (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $15 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $15 per share. Yost exercised all of his options when the share price was $26 per share. Two years after acquiring the shares, he sold them at $47 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? X Answer is complete but not entirely correct. Amount of Deduction Grant date Exercise date Sale date $ $ $ 0 $ 2,700 × $ 0 Tax Savings 0 693 0
Required information Problem 12-31 (LO 12-2) (Static) [The following information applies to the questions displayed below.] Antonio received 40 ISOs (each option gives him the right to purchase 20 shares of Zorro stock for $3 per share) at the time he started working for Zorro Corporation six years ago. Zorro's stock price was $3 per share at the time. Now that Zorro's stock price is $50 per share, Antonio intends to exercise all of his options and immediately sell all the shares he receives from the options exercise. Note: Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable. Problem 12-31 Part d (Static) d. What are the cash flow effects to Zorro resulting from Antonio's option exercise? Cash Flow Consequences Grant date Exercise date and sale date 0 None of these Net cash inflow
Required Information Problem 12-28 (LO 12-2) (Algo) [The following information applies to the questions displayed below.] Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $20 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $20 per share. Yost exercised all of his options when the share price was $40 per share. Two years after acquiring the shares, he sold them at $62 per share. (Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.) Problem 12-28 Part a (Algo) a. What are Yost's taxes due on the grant date, exercise date, and sale date, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? Grant date Exercise date Sale date Income Amount Taxes Due
Required Information Problem 12-28 (LO 12-2) (Algo) [The following information applies to the questions displayed below.] Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $20 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $20 per share. Yost exercised all of his options when the share price was $40 per share. Two years after acquiring the shares, he sold them at $62 per share. (Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.) Problem 12-28 Part b (Algo) b. What are Cutter Corporation's tax consequences (amount of deduction and tax savings from deduction) on the grant date, the exercise date, and the date Yost sold the shares? Grant date Exercise date Sale date Amount of Deduction Tax Savings
! Required information [The following information applies to the questions displayed below.] Haven received 200 NQOs (each option gives him the right to purchase 20 shares of Barlow Corporation stock for $7 per share) at the time he started working for Barlow Corporation three years ago when its stock price was $7 per share. Now that Barlow's share price is $50 per share, he intends to exercise all of his options. After acquiring the 4,000 Barlow shares with his options, he intends to hold the shares for more than one year and then sell the shares when the price reaches $75 per share. (Leave no answer blank. Enter zero if applicable. Input all amounts as positive values.) b. What are the cash flow effects for Barlow Corporation resulting from Haven's option exercise? How would it change if Barlow's marginal rate were 0 percent? Date Tax benefit on grant date Tax benefit in year of exercise Tax benefit in year of sale Tax benefit when tax rate is 0% Amount
Required information [The following information applies to the questions displayed below.] Mark received 10 ISOs (each option gives him the right to purchase 16 shares of Hendricks Corporation stock for $6 per share) at the time he started working for Hendricks Corporation five years ago, when Hendricks's stock price was $5 per share. Now that Hendricks's share price is $35 per share, Mark intends to exercise all of his options and hold all of his shares for more than one year. Assume that more than a year after exercise, Mark sells the stock for $35 a share. (Enter all amounts as positive values. Leave no answers blank. Enter zero if applicable.) a. What are Mark's taxes due on the grant date, the exercise date, and the date he sells the shares, assuming his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent? Grant date Exercise date Sale date Taxes Due
Todd Winningham IV has $5,700 to invest. He has been looking at Gallagher Tennis Clubs Inc. common stock. Gallagher has issued a rights offering to its common stockholders. Six rights plus $64 cash will buy one new share. Gallagher's stock is selling for $82 ex- rights. a-1. How many rights could Todd buy with his $5,700? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of rights a-2. Alternatively, how many shares of stock could he buy with the same $5,700 at $82 per share? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of shares b. If Todd invests his $5.700 in Gallagher rights and the price of Gallagher stock rises to $90 per share ex-rights, what would his dollar profit on the rights be? (First compute profit per right.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Dollar profit
4. You decide to sell 100 shares of Topgun Enterprises Inc. short when it is selling at its yearly high of $42.25. Your broker tells you that your margin requirement is 60 percent and that the commission on the sale is $20. While you are short, Topgun pays a $0.85 per share dividend. At the end of one year you buy your Topgun shares (cover your short sale) at $44 and are charged a commission of $20 and a 5 percent interest rate. a. What is your dollar return on the investment? b. What is your rate of return on the investment?
Suppose you owned 1000 shares of stocks in ABC Corporation. You purchased the shares at a price of $102.41 per share and sold them at $160.38. Question 11 options: Calculate the broker's commission if your broker charges 3.6% of the total sale price, Ignoring dividends, determine your profit on the sale of all the purchased stock? 1. $160, 380.00 2. $3, 686.76 3. $57, 970.00 4. $5, 773.68
Yost received 300 NQOS (each option gives Yost the right to purchase 10 shares of Cutter Corporation stock for $25 per share). At the time he started working for Cutter Corporation three years ago, Cutter's stock price was $25 per share. Yost exercised all of his options when the share price was $50 per share. Two years after acquiring the shares, he sold them at $77 per share. Note: Input all amounts as positive values. Leave no answer blank. Enter zero if applicable. Problem 12-28 Part d (Algo) d. Assume that Yost's options were exercisable at $30 and expired after five years. If the stock only reached $28 during its high point during the five-year period, what are Yost's tax consequences on the grant date, the exercise date, and the date the shares are sold, assuming his ordinary marginal rate is 35 percent and his long-term capital gains rate is 15 percent? Answer is complete but not entirely correct. Taxes Dus $ 26,250 Grant date Exercise date Sale date 00 12,150

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