Question 1

Deferred compensation plans offer favorable tax treatment, yet many employees and self-employed individuals do not take advantage of them. Choose a deferred compensation plan, discuss it features, its tax benefits, and limitations if any.

Discuss whether or not you would participate in the particular deferred compensation if given the opportunity.

Question 2

The company you work for has had the policy to extend credit terms to a majority of your customers, and this has had a two-fold effect. The company has gained many new customers, but the company has also experienced difficulties collecting the monies owed due to the volume of accounts receivables.

How would you address the accounting effects of this approach with upper management? Also, in your view, what would be the next steps for improvement that the company would need to undertake in order to correct the problem? Explain your reasoning.

Question 3

Explain how the Two-Stage Free Cash Flow to the Firm valuation method can be used to calculate firm value. Provide an example.