Problem $1(25$ marks$).$ What are the advantages of the corporate form over a sole propri$-$

etorship or a partnership? What are the disadvantages of this form?

Problem $2(20$ marks$).$ What ethical issues could confront a financial manager? Please use

one example to illustrate.

Problem $3(30$ marks$).$ You are a shareholder in a C corporation. The corporation earns

$$2\mathrm{.}00$ per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to

you as a dividend. Assume the corporate tax rate is $25\%$ and the personal tax rate on all

income is $20\%.$

a$)$ How much is left for you after all taxes are paid? $[15$ marks$]$

b$)$ Assuming the corporate is an S corporation, how much is left for you after all taxes

are paid? $[15$ marks$]$

Problem $4(25$ marks$).$ You are the CEO of a company and you are considering entering into

an agreement to have your company buy another company. You think the price might be too

high, but you will be the CEO of the combined, much larger company. You know that when

the company gets bigger, your pay and prestige will increase. What is the nature of the agency

conflict here and how is it related to ethical considerations?