Megan operates a housecleaning business as a sole proprietorship. She oversees a team of 10 cleaning personnel, markets the business, and provides supplies and equipment. The business has been generating net taxable profits of $58,000 per year, before considering the Section 199A deduction. As a sole proprietor, Megan qualifies for the 20 percent deduction, reducing taxable income from the business to $46,400.

a. Assume that Megan’s marginal tax rate on ordinary income is 35 percent and that she has no pressing need for cash flow from this business. Should Megan consider incorporating and operating the business through a C corporation? Provide calculations to support your conclusion. (Ignore any payroll or self-employment tax considerations.)

b. How would your conclusion in part a change if Megan’s marginal tax rate were only 28 percent?

The silverside company is considering investing in two alternative projects: project 1 project 2 investment $500,000 $240,000 useful life (years) 8 7 estimated annual net cash inflows for useful life $120,000 $40,000 residual value $32,000 $10,000 depreciation method straightminusline straightminusline required rate of return 11% 8% what is the accounting rate of return for project 2? (round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, x.xx%.)

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?

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