According to the text, the exception amount for active owners is phased out as income increases: the $25,000 maximum exception amount is phased out by 50 cents for every dollar the taxpayer’s adjusted gross income (before considering the rental loss) exceeds $100,000. 120,000-100,000*.5= 10,000 phase out 25,000-10,000= 15,000 total deductible loss; Alexa can still deduct the $2,400 because her loss is less than the 15,000. New AGI 120,000-2,400= $117,600 d. Assume that Alexa’s AGI from other sources is $200,000. This consists of $150,000 salary, $10,000 of dividends, and $25,000 of
,Sarah L. G January 6, 2013 Written Assignment #1 1. A) $1,000 with 5% interest after 10 years gives you $1,628. Therefore, you would gain $628 in interest. B) If the interest is withdrawn each year, a total of $500 would be earned because the $1,000 investment would earn $50 of simple interest each year. C) The answers are different because if the interest is left untouched, it makes the principal amount higher each year, giving more money after 10 years.
Since the firm's director of capital budgeting spent some of her time last year to evaluate the new project, a portion of her salary for that year should be charged to the project's initial cost. c. The company has spent and expensed $1 million on R&D associated with the new project. d. The company spent and expensed $10 million on a marketing study before its current analysis regarding whether to accept or reject the project. e. The firm would borrow all the money used to finance the new project, and the interest on this debt would be $1.5 million per year. 20.
• begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales. • shows how long the firm keeps its inventory before selling it. Click here to download STR 581 Week 4 Capstone 2 19. Ajax Corp. is expecting the following cash flows - $79,000, $112,000, $164,000, $84,000, and $242,000 – over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows?
| | | Student Answer: | | 16.87% | | | | 17.75% | | | | 18.69% | | | | 19.67% | | | | 20.66% | | | | Points Received: | 6 of 6 | | Comments: | | | | Question 3. | Question : | You have a chance to buy an annuity that pays $1,000 at the end of each year for three years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? | | | Student Answer: | | $2,697.93 | | | | $2775.79 | | | | | $2921.86 | | | | | $3,075.64 | | | | $3,237.52 | | Instructor Explanation: | The answer represents the present value of the cash flows discounted by 5.5% over three years.
They both plan to retire 45 years from today. Because their budget seems tight right now, they had been thinking that they would wait at least 10 years and then start investing $2400 per year to prepare for retirement. Tricia just told Tom, though, that she had heard that they would actually have more money the day they retire if they put $2400 per year away for the next 10 years – and then simply let that money sit for the next 35 years without any additional payments – than they would have if they waited 10 years to start investing for retirement and then made yearly payments for 35 years (as they originally planned to do). Please help Tom and Tricia make an informed decision: Assume that all payments are made at the end of a year, and that the rate of return on all yearly investments will be 8% annually. 1.
Shifting a portion of income to family members can also lower ones tax bill, you are allowed to give $12,000 per year to each recipient without incurring a gift tax but watch out for kiddie tax rules before considering this option. Claim your dependents on your taxes as it may mean $1k per each qualified child dependent showing up as a tax credit for the year. Credits are worth more than deductions since they directly lower ones tax liability dollar for dollar. Plan deductions by determining if taking them this year compared to next year would be more beneficial your
most common form of organization reduced legal liability for investors lower taxes harder to transfer ownership 4. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year?
2. Based on the following, calculate the costs of buying and of leasing a motor vehicle. Purchase Costs Leasing Costs Down payment $1,500 Security deposit $500 Loan payment $450 for 48 months Lease payment $450 for 36 months Estimated value at End of loan $4,000 End of lease charges $600 Opportunity cost interest rate: 4 percent 3. You can purchase a service contract for all of your major appliances for $180 a year. If the appliances are expected to last for 10 years, and you earn 5 percent on your savings, what would be the future value of the amount you would pay for the service contract?
Eisenhower communications is trying to estimate the first-year net operating cash flow (at year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenue $10 million Operating costs (excluding depreciation) $ 7 million Depreciation $ 2 million Interest expense $ 2 million The company has a 40 percent tax rate, and its WACC is 10 percent a. What is the project’s operating cash flow for the first year? b. If this project would cannibalize other projects by $1 million of cash flow before taxes per year.