(Converted to sequential multiple choice) The statement of facts for 29-32 is as follows: (Two points each): Paro Detective Supply, Inc., an accrual basis taxpayer, reports the following for the last completed calendar year. The following questions concern the computation of taxable income of this taxpayer. Net income from sales $62,000 Municipal bond interest this year 3,500 Prepaid rent income for the next year received in the last completed year 2,500 Dividend from less than 20% owned corporation 6,000 Net capital loss (3,000) Federal income tax 10,500 MACRS depreciation 19,600 Charitable contribution - cash 10,000 Municipal bond interest is:

At a student café, there are equal numbers of two types of customers with the following values. the café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i. e., she cannot price-discriminate). students with early classes students without early classes coffee 70 60 banana 51 101 the marginal cost of coffee is 10 and the marginal cost of a banana is 40. the café owner is considering three pricing strategies: 1. mixed bundling: price bundle of coffee and a banana for 161, or just a coffee for 70. 2. price separately: offer coffee at 60, price a banana at 101. 3. bundle only: coffee and a banana for 121. do not offer goods separately. assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. for simplicity, assume there is just one student with an early class, and one student without an early class. price strategy revenue from pricing strategy cost from pricing strategy profit from pricing strategy 1. mixed bundling $ $ $ 2. price separately $ $ $ 3. bundle only $ $ $ pricing strategy yields the highest profit for the café owner.