Answered: A) Could you please calculate what is…

A) Could you please calculate what is going to be the Inheritance tax liability if Adam dies and transfers all his Estate to his children

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sharon and Brian are in good health and have reasonably secure careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. If one should die, they think that funeral expenses would be $12,000. What is their total insurance need using the DINK method?
Alex wants to provide funding in the event of his death for his daughter Ellie, age 8, to attend four years of college, starting at age 18. The current annual cost of tuition is $20,000. Assume inflation of 6.5% and after-tax earnings of 7%. If Alex wants to have enough life insurance to assure adequate funds for Ellie when she begins college (should he die today), approximately how much insurance should he have for this need alone? (Round your answer to the nearest dollar.) A)$113,764 B)$75,806 C)$75,451 D)$79,441
Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Ryan inherited an annuity worth $3,280.16 from his uncle. The annuity will pay him five equal payments of $800 at the end of each year. The annuity fund is offering a return of . Ryan’s friend, Sebastian, wants to go to business school. While his father will share some of the expenses, Sebastian still needs to put in the rest on his own. But Sebastian has no money saved for it yet. According to his calculations, it will cost him $30,044 to complete the business program, including tuition, cost of living, and other expenses. He has decided to deposit $4,200 at the end of every year in a mutual fund, from which he expects to earn a fixed 7% rate of return. It will take approximately for Sebastian to save enough money to go to business school.
Anthony and Amy expect to settle down and purchase a home now that Anthony has a stable job with a solid long- term growth company. They are meeting with their loan officer to determine which mortgage would best suit their needs. Amy is a stay-at-home mom raising their two school-age children. She sometimes provides child care services for her immediate family members. Neither Anthony nor Amy have served in the military, Anthony and Amy want to secure a mortgage that offers the lowest monthly payment with a fixed interest rate. Based on this information, which mortgage would be the most appropriate choice?\\n\\nA)\\nAdjustable-rate mortgage\\nB)\\n30-year conventional mortgage\\nC)\\n15-year conventional mortgage\\nD)\\nVA mortgage
You are a dual-income, no-kids family. You and your spouse have the following debts: Mortgage = $261,000; Auto loan = $10,000; Credit card balance = $2,150; and other debts = $6,200. Further, you estimate that your funeral will cost $9,000. Your spouse expects to continue to work after your death. Using the DINK method, what should be your need for life insurance? Total insurance need $ 288,350
Kim and Kayne have been dating for years and are now thinking about getting married. As a financially sophisticated couple, they want to think through the tax implications of their potential union. a. Suppose Kim and Kanye both earn $65,000 (so their combined income is $130,000). Using the tax bracket information Data table (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) TABLE 1.2: Federal Income Tax Rates and Brackets for Individual Returns (2018) Tax Rates Taxable Income Taxes 10.0% $0 to $9,875 10% of taxable income 12.0% $9,876 to $40,125 $987.50, plus 12% of the amount over $9,876 22.0% $40,126 to $85,525 $4,617.50, plus 22% of the amount over $40,126 24.0% $85,526 to $163,300 $14,605.50, plus 24% of the amount over $85,526 32.0% $163,301 to $207,350 $33,271.50, plus 32% of the amount over…
Bella Wans is interested in buying a new motorcycle. She has decided to borrow the money to pay the $25,000 purchase price of the bike. She is in the 33% income tax bracket. She can either borrow the money at an interest rate of 7% from the motorcycle dealer, or she could take out a second mortgage on her home. That mortgage would come with an interest rate of 9%. Interest payments on the mortgage would be tax deductible for Bella, but interest payments on the loan from the motorcycle dealer could not be deducted on Bella's federal tax return. a. Calculate the after-tax cost of borrowing from the motorcycle dealership. b. Calculate the after-tax cost of borrowing through a second mortgage on Bella's home. C. Which source of borrowing is less costly for Bella? d. Should Bella consider any other factors when deciding which loan to take out?
You and your spouse are in good health and have reasonably secure careers. Each of you makes about $40,000 annually. You own a home with an $80,000 mortgage, and you owe $15,000 on car loans, $5,000 on personal debts, and $4,000 on credit card loans. You have no other debt. You have no plans to increase the size of your family in the near future. Estimate your insurance needs using the DINK method. Show work!
Suppose you are 28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. Suppose you expect a significant career or family change in three years, which requires substantial initial capital commitment (e.g., starting your own business, relocating abroad, buying a house, children going to college, etc.). Which of the following seems to be the most appropriate investment strategy? a.Take a loan to buy an investment condo. b.Use your savings to buy a small number of stocks that you believe to rise in price. c.Use your savings to buy well-diversified stock mutual fund shares. d.Use your savings to buy well-diversified bond mutual fund shares.
John is trying to decide whether to contribute to a Roth IRA or a traditional IRA. He plans on making a $5,000 contribution to whichever plan he decides to fund. He currently pays tax at a 32 percent marginal income tax rate, but he believes that his marginal tax rate in the future will be 28 percent. He intends to leave the money in the Roth IRA or traditional IRA for 30 years, and he expects to earn a 6 percent before-tax rate of return on the account. (Use Table 1.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Problem 13-78 Part b (Static) b. How much will John accumulate after taxes if he contributes to a traditional IRA (consider only the funds contributed to the traditional IRA)?
Sean and Amy Anderson have a home with an appraised value of $180,000 and a mortgage balance of only $90,000. Given that an S&L is willing to lend money at a loan-to-value ratio of 75%, how big a home equity credit line can Sean and Amy obtain? How much, if any, of this line would qualify as tax-deductible interest if their house originally cost $100,000?
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