Parker & stone, inc., is looking at setting up a new manufacturing plant in south park to produce garden tools. the company bought some land six years ago for $5.9 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. if the land were sold today, the company would net $6.2 million. the company wants to build its new manufacturing plant on this land; the plant will cost $13.4 million to build, and the site requires $860,000 worth of grading before it is suitable for construction. what is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? (enter your answer in dollars, not millions of dollars, e. g., 1,234,567.)

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You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

Pear co.’s income statement for the year ended december 31, as prepared by pear’s controller, reported income before taxes of $125,000. the auditor questioned the following amounts that had been included in income before taxes: equity in earnings of cinn co. $ 40,000 dividends received from cinn 8,000 adjustments to profits of prior years for arithmetical errors in depreciation (35,000) pear owns 40% of cinn’s common stock, and no acquisition differentials are relevant. pear’s december 31 income statement should report income before taxes of