IMEX Global Solutions issued a bond on December 31, 2015 to the public which pays $80 once per year in interest and a $1,000 principal repayment after year 10, and is priced in the open market to reflect a required return of 11.5% to bondholders, or $798. The company’s management has the option of redeeming this bond early for $1,050 plus any accrued interest.

As it relates to the IMEX bonds, identify the following:

Face value

Market value                    

Coupon rate

Yield to maturity             

Current yield                    

Call premium                    

Maturity                           

Identify the following general statements concerning bonds as True or False:

Bonds provide tax benefits to issuers of bonds.  

The risk of company insolvency increases when a firm issues bonds.

Municipal bonds pay interest that is federally and state tax-free.           

All else constant, a bond will sell at a discount when its coupon rate is less than its yield to maturity.                                                                                       

Decreasing the time to maturity increases the price of a discount bond, all else unchanged.                                                                                   

SHOW YOUR CALCULATIONS FOR #13-#20.

You have the option of performing calculations manually or with the use a financial calculator or spreadsheet. Either way, you must specify what is being calculated to earn credit:

Lion Equity paid an annual dividend of $3.25 per share last month, and it is anticipated that future dividends will increase by 4% annually. As a shareholder, if you require a 12% return on your investment in Lion Equity, how much are you willing pay to purchase one share of stock in Lion Equity today?Charming Shoppes will pay an annual dividend of $2.55 next year with future dividends increasing by 4% annually. If the market rate of return on this stock is 12.5%, what should the stock be currently selling for?The Clark Group pays an annual dividend of $5.80 per share. The economy is tough but Clark promises to continue maintaining this level of dividend every year for the time being. How much are you willing to pay for one share of this stock is you want to earn a 14.5% annual return?Miller Cooper just paid a $4.25 annual dividend with the stated intention of increasing its dividend by 3% annually. You would like to purchase stock in this firm but realize that you will not have the funds to do so for another 4 years. If you require a 15% rate of return, how much will you be willing to pay per share for the stock when you can afford to make this investment?Town Bagel common stock sells for $65 a share and pays an annual dividend that increases by 4% annually. The market rate of return on this stock is 14%. What is the amount of the last dividend paid?Erie Health Care common stock offers an expected total return of 9.5%. The last annual dividend was $2.10 a share and dividends are expected to increase at a constant 3% percent per year. What is the dividend yield?The preferred stock of AKA Enterprises pays an annual dividend of $8.50 and sells for $55.74 a share. What is the rate of return on this security?

[The following information applies to the questions displayed below.]

Reba Dixon is a fifth-grade school teacher who earned a salary of $38,000 in 2017. She is 45 years old and has been divorced for four years. She receives $1,200 of alimony payments each month from her former husband. Reba also rents out a small apartment building. This year Reba received $30,000 of rental payments from tenants and she incurred $19,500 of expenses associated with the rental.

Reba and her daughter Heather (20 years old at the end of the year) moved to Georgia in January of this year. Reba provides more than one-half of Heather’s support. They had been living in Colorado for the past 15 years, but ever since her divorce, Reba has been wanting to move back to Georgia to be closer to her family. Luckily, last December, a teaching position opened up and Reba and Heather decided to make the move. Reba paid a moving company $2,010 to move their personal belongings, and she and Heather spent two days driving the 1,426 miles to Georgia. During the trip, Reba paid $200 for lodging and $85 for meals. Reba’s mother was so excited to have her daughter and granddaughter move back to Georgia that she gave Reba $3,000 to help out with the moving costs.

Reba rented a home in Georgia. Heather decided to continue living at home with her mom, but she started attending school full-time in January at a nearby university. She was awarded a $3,000 partial tuition scholarship this year, and Reba helped out by paying the remaining $500 tuition cost. If possible, Reba thought it would be best to claim the education credit for these expenses.

Reba wasn’t sure if she would have enough items to help her benefit from itemizing on her tax return. However, she kept track of several expenses this year that she thought might qualify if she was able to itemize. Reba paid $2,800 in state income taxes and $6,500 in charitable contributions during the year. She also paid the following medical-related expenses for her and Heather:

   Insurance premiums$4,795Medical care expenses 1,100Prescription medicine 350Nonprescription medicine 100New contact lenses for Heather 200 

Shortly after the move, Reba got distracted while driving and she ran into a street sign. The accident caused $900 in damage to the car and gave her whiplash. Because the repairs were less than her insurance deductible, she paid the entire cost of the repairs. Reba wasn’t able to work for two months after the accident. Fortunately, she received $2,000 from her disability insurance. Her employer, the Central Georgia School District, paid 60 percent of the premiums on the policy as a nontaxable fringe benefit and Reba paid the remaining 40 percent portion.

A few years ago, Reba acquired several investments with her portion of the divorce settlement. This year she reported the following income from her investments: $2,200 of interest income from corporate bonds and $1,500 interest income from City of Denver municipal bonds. Overall, Reba’s stock portfolio appreciated by $12,000 but she did not sell any of her stocks.

Heather reported $3,200 of interest income from corporate bonds she received as gifts from her father over the last several years. This was Heather’s only source of income for the year.

Reba had $10,000 of federal income taxes withheld by her employer. Heather made $500 of estimated tax payments during the year. Reba did not make any estimated payments. Reba had qualifying insurance for purposes of the Affordable Care Act (ACA).

what is medical expenses deduction amount?