## A town has a total residential property assessment of \$975

A town has a total residential property assessment of \$975 500 000. It is originally estimated that \$15 567 000 must be raised through residential taxation to meet expenditures.

(a) What tax rate per \$1000 must be set to raise \$45 567 000 in property taxes?

(b) What is the property tax on a property assessed at \$235 000?

(c) The town later finds that it underestimated building costs. An additional \$2 000 000 in taxes must be raised. Calculate the increase in the tax rate required to meet these additional costs.

(d) How much more will the property taxes be on the property assessed at \$235 000?

## Answer each of the following questions.(a) What is the percentage

Answer each of the following questions.

(a) What is the percentage rate if the base is 88 and the percentage is 55?

(b) 63 is what percent of 36?

(c) What is 3/4% of \$64?

(d) 450% of \$5 is what amount?

(e) \$245 is 87 1/2 % of what amount?

(f) 2 1/4% of what amount is \$9.90?

(g) What percent of \$62.50 is \$1.25?

(h) \$30 is what percent of \$6?

(i) 166 2/3% of what amount is \$220?

(j) \$1.35 is 1/3% of what amount?

## 1. lululemon athletica inc. reported that its net revenue for

1. lululemon athletica inc. reported that its net revenue for the third quarter of 2018 was \$747.7 million, an increase of 21% compared to the third quarter of fiscal 2017. Calculate the net revenue for the third quarter of 2017 (rounded to the nearest hundred thousand dollars).

2. Calculate e-commerce revenue as a percentage of total revenue for the period.

3. Calculate the rate of discount for each of the four clearance items listed under the “we made too much” link (rounded to 2 decimal places).

4. Assuming lululemon’s overhead is 30% of the regular selling price, and that the cost of the Women’s Wonder Under Pant is \$36, determine

(a) The markup, the overhead, and the profit for this item sold at the regular selling price;

(b) The markup, the overhead, and the profit for this item sold at the clearance price.

lululemon athletica, a high-end retail chain dedicated to yoga and fitness apparel, recently experienced several years of record growth.

Founded and headquartered in Vancouver, British Columbia, lululemon manufactures and sells technical athletic wear aimed primarily at active men and women who are willing to pay premium prices for workout gear. These high prices have allowed the retailer to maintain a gross margin annually above 50% since 2003.

Although the initial goal was to have only one store, consumer demand has resulted in multiple locations.

Most stores are located in major cities in Canada, the United States, Australia, New Zealand, and the United Kingdom, as well as in Singapore. lululemon’s huge sales growth can be largely attributed to the company’s extensive store expansion.

To reach even more customers, lululemon launched a successful e-commerce operation on its company website in 2009. After posting its best-ever first quarter, lululemon said that its priorities were to grow existing stores and to invest more in its thriving online division. On its company website, Lululemon reported a 30% increase in traffic to its e-commerce site in 2018 with its e-commerce efforts netting US \$476.9 million in sales, compared to US \$421.1 million the year before.

The company offers regular-priced in-store products online. It also offers discounted men’s and women’s athletic wear under its “we made too much” clearance link.

The following items were recently discounted on the lululemon website:

Women’s Wunder Under Pant: \$69.00 CAD (was \$88.00)

Women’s Get Started Jacket: \$49 CAD (was \$118.00)

Men’s Cardio SS Tech Top: \$24.00 CAD (was \$58.00)

Men’s Performance Jacket: \$44.00 CAD (was \$88.00)

## 1. Calculate total contribution margin and contribution rate for the

1. Calculate total contribution margin and contribution rate for the company’s third quarter of 2019 operations.

2. Calculate the company’s fixed cost.

3. What is the selling price of one gram of cannabis in this operation?

4. How many kilograms and kilogram equivalent of cannabis the company must sell to break even?

After a lengthy process, the legalization of recreational marijuana in Canada came into effect when Bill C-45 was passed by the Senate and received royal assent from the Governor General. Bill C-45, known as the Cannabis Act, became law and came into force on October 17, 2018. With the passage of this law, Canada became the second country in the world that has legalized recreational marijuana. Uruguay was the first country to legalize marijuana in December 2013.

The newness of the cannabis industry in Canada raises a number of concerns in the country. There are concerns from the medical community, law enforcement, and corporate Canada that need to be studied and investigated.

The medical community is concerned about health-related issues that might affect cannabis users. Based on the Cannabis Act, the minimum legal age for the use of marijuana is 19. The medical community is concerned because the brain continues to develop until the age of 25 and cannabis will have adverse effects on brain development if young people use cannabis.

The law-enforcement community believes that it does not have the resources necessary to deal with legalized marijuana. For example, they question the testing equipment and its effectiveness for testing drivers who drive under the influence of marijuana. They also believe that legalization positively affects the tourism industry and people will come to Canada from anywhere in the world searching for legal consumption of marijuana. In addition, they believe that the public is not prepared and lacks training and education that should be provided by the government.

Corporate Canada, on the other hand, is very bullish about the industry and believes that the legalization of cannabis brings huge opportunity to Canada, making it possible for Canada to become a world leader in cannabis production. The players in this industry are concerned that the minimum age requirement will leave a big portion of the market in the hands of the illegal market. According to the Statistics Canada estimates,1 4.9 million Canadians older than 15 years consumed cannabis in 2017, and 6 percent of them were 15 to 17 years old.

One of the Canadian players in the cannabis industry is Canopy Growth Corp. “The company, through its subsidiaries, is the licensed producer of medical marijuana in Canada. It grows, produces and sells medical marijuana under various brand names including Tweed, Bedrocan, and Mettrum”.2 In the third quarter of its 2019 fiscal year,3 the company reported sales revenue of \$83.05 million. Total cost of sales for the quarter was \$64.8 million. The company’s operating expenses for the quarter were \$169.7 million, including sales and marketing expenses, general and administrative expenses, and research and development expenses. The company sold 10 102 kilograms and kilogram equivalent of dry cannabis. At the end of the quarter, the company reported a net loss of \$75.1 million for the quarter.

## 1. What portion of her eligible home expenses may Camille

1. What portion of her eligible home expenses may Camille claim as tax-deductible expenses if the expenses are allocated on the basis of (a) area?

2. What is her net business income if Camille allocates home expenses on the basis of area?

3. For most individuals, basic federal income tax equals the federal tax calculated according to Table 3.3, less non-refundable tax credits. What is Camille’s basic federal income tax if she reports a non-refundable tax credit of \$12,138? Federal tax is reduced by 15% of total non-refundable tax credits.

4. What percent of Camille’s business income is basic federal income tax?

5. What percent of Camille’s taxable income is basic federal income tax?

Camille operates a child care service from her home. Her gross business income for 2018 amounted to \$42 350. Her tax-deductible business expenses consisted of the following:

Dues, memberships, subscriptions …………………………… 520
Motor vehicle expenses ………………………………………….. 1115
Supplies …………………………………………………………………… 582
Meals and entertainment ………………………………………… 495
Other expenses ……………………………………………………….. 437

Camille can also deduct home expenses, such as utilities, property taxes, house insurance, mortgage interest, and maintenance for the business use of a workspace in her home. The amount that may be deducted is a proportion of the total annual home expenses allocated to the workspace on a reasonable basis, such as area or number of rooms. Camille’s eligible home expenses for the year were:

Heat ………………………………………….. \$3750
Power …………………………………………. 2480
Water …………………………………………… 610
House insurance ………………………… 1420
Maintenance ………………………………. 1930
Mortgage interest ………………………. 6630
Property taxes …………………………… 3260
Other expenses …………………………… 690

The house covers 345 square metres and consists of eight rooms. Camille uses one room with an area of 45 square metres as her business office.

Table 3.3

## In the hotel industry, three important metrics that hotel managers

In the hotel industry, three important metrics that hotel managers consider to improve their hotel performance are Occupancy Rate, Average Daily Rate (ADR), and Revenue per Available Room (REVPAR), with the last metric being the most important one among all. Occupancy rate is the ratio of rooms sold in a given day divided by the total number of rooms available. ADR is the average of the selling price of all the rooms sold for one day. REVPAR is calculated by multiplying the ADR by the occupancy rate.

You are the hotel manager for a busy downtown hotel that has 120 rooms available to sell.

(a) What is the occupancy rate if you sell 84 rooms on a specific day?

(b) If the average daily rate is \$180, calculate the REVPAR.

(c) Write an equation in the form of y = mx + b for this problem so that you can use it to calculate the hotel’s total revenue. Hint: Let x be the occupancy rate.

(d) If you target a minimum revenue of \$15 000 in a given day, how many rooms do you have to sell, assuming the ADR equals \$180?

## 1. How many shares of each stock would he get

1. How many shares of each stock would he get if he used the \$28 500 and invested equally in all four companies?

2. Suppose Amarjit decided to buy shares in only TELUS and Goldcorp. How many shares of each would he get if he used the \$28 500 and bought three times as many shares of TELUS as he bought of Goldcorp?

3. Suppose Amarjit decided to buy shares in only International Forest Products and the Bank of Montreal. How many shares of each company would he get if he used the \$28 500 and bought two shares of the Bank of Montreal for every three shares of International Forest Products?

Amarjit was preparing his annual tax return when he noticed that he had a \$28 500 unused RRSP contribution limit. Through discussion with his financial advisor, Amarjit realized that he had not fully contributed to his RRSP in past years.

The advisor suggested that Amarjit borrow funds through an RRSP loan to take advantage of his unused contribution limit, as she believed that his RRSP’s growth rate would be higher than the interest paid on the loan. The advisor knew of a bank making RRSP loans at a simple interest rate of 4.75% with four end-of-year principal payments required of \$7125 each.

Amarjit agreed to this idea, and contemplated being more aggressive with his investments. He asked his advisor to discuss investments in the stock market. The advisor suggested to him that while investing in the stock market had the potential for higher gains, there was also the possibility of losing money. Investing in equities (stocks) was riskier than his current conservative portfolio of bank savings accounts, treasury bills, and guaranteed investment certificates (GICs).

Details of several leading Canadian companies were provided to Amarjit to consider investing in:

## To earn some money, John is thinking of starting up

To earn some money, John is thinking of starting up a “Back-Yard BBQ” stand at his university campus this summer. The basic “BBQ” equipment will cost \$2690 and the variable cost (VC) for each “BBQ Meal” is estimated to be \$6.75. He thinks he will be able to sell each “BBQ Meal” for \$10.00.

(a) What is the break-even quantity of “BBQ Meals” for John’s “Back-Yard BBQ” stand?

(b) If John’s goal for profit is \$2500 for his fall semester tuition, how many “BBQ Meals” would he need to sell in the summer to reach his goal?

## Grant bought a new lawn tractor on his credit card

Grant bought a new lawn tractor on his credit card for \$1998. He pays his credit card off in full each month so that he does not incur huge credit card interest on his purchases. This month he was a little short on cash so he paid off the credit card balance using his secured line of credit, which charges him prime (2.75%) plus 1%. If he paid off the line of credit in two equal installments, plus the interest, at 15 days after the purchase and 30 days after the purchase, what was the total amount of interest paid on the purchase of the lawn tractor?

## 1. Suppose Shannon and Duncan pay off their credit cards

1. Suppose Shannon and Duncan pay off their credit cards with their line of credit on April 20. They will make their monthly payments on the 20th of each month, beginning in May. Create a schedule showing their monthly payments for the next ten months. How much interest will they pay using this repayment plan?

2. Suppose Shannon and Duncan had not gotten a line of credit but kept their credit cards. They decided not to make any more credit card purchases. Instead, they borrowed \$8500 from Shannon’s parents to pay off the MasterCard and Visa and made monthly payments equal to one-tenth of the original credit card debt plus simple interest of 10% p.a. on the remaining monthly balance. They will make their monthly payments on the 20th of each month, beginning in May. Create a schedule showing their monthly payments for the next ten months. How much interest would they have paid using this repayment plan?

3. How much money did Shannon and Duncan save on interest by borrowing from Shannon’s parents?

4. What are the requirements for obtaining a line of credit from your financial institution?

Shannon and Duncan Fisher were concerned about their level of debt. They had borrowed from their bank to purchase their house, car, and computer. For these three loans, the Fishers must make regular monthly payments. The couple also owe \$6000 to MasterCard and \$2500 to Visa. Shannon and Duncan decided to meet with a consumer credit counsellor to gain control of their debts.

The counsellor explained to them the details of their loans and credit card debts. Shannon and Duncan were shocked to discover that whereas their computer and car loans had an interest rate of 7.95% p.a., their credit cards had an interest rate of 19.99% p.a. The counsellor pointed out that the interest rate on their three loans was reasonable. However, because the interest rate on the credit cards was so high, she advised Shannon and Duncan to borrow money at a lower interest rate and pay off the credit card debts.

The credit counsellor suggested that they should consider obtaining a home equity line of credit (HELOC). She explained that the rate of interest on the line of credit would likely be a few percentage points higher than the prime rate, but much lower than the rate of interest charged on the credit card balances. Shannon and Duncan would have to make a minimum payment every month, similar to that of a credit card. The payment would then be applied to pay all the interest and a portion of the principal balance owing on the line of credit. The line of credit would allow them to make monthly payments higher than the minimum so that they could pay as much toward the principal balance as they could afford. Due to the much lower interest rate on a line of credit as compared to a typical credit card, the money they would save on interest each month could be paid toward the principal. A line of credit appealed to Shannon and Duncan, as it helped them feel more in control of their finances and gave them the resolve to pay off their credit card debts.

Shannon and Duncan then met with their bank manager and were approved for a \$15 000 line of credit. Immediately, they paid off the \$6000 owed to MasterCard and the \$2500 owed to Visa with money from the line of credit. They then decided to pay off the line of credit over the next ten months by making monthly payments equal to onetenth of the original line of credit balance plus the simple interest owed on the remaining line of credit balance. The simple interest rate on the line of credit is expected to be 6.25% over the next ten months. Shannon and Duncan agreed to cut up their credit cards and not charge any more purchases until they had paid off their line of credit.