At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $50,000 with a yield to maturity of 5 percent. Given that she will not actually receive any interest payments until the bond matures in 18 years, how much interest income will she report this year assuming semiannual compounding of interest?
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- At the beginning of his current tax year, David invests $12.410 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 25 years. David receives $960 in interest ($480 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 7.6 percent. (Round your intermediate calculations to the nearest whole dollar amount.) a. How much interest income will he report this year if he elects to amortize the bond premium? Semiannual Period 1 2 Yearly Total Adjusted Basis of Bond at Beginning of Semiannual Period $ Interest Received 12,410 $ $ Premium Amortization 480 $ 480 960 $ Reported Interest 8 $ 9 17 LA $ 472 472At the beginning of his current tax year, David invests $12,840 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 20 years. David receives $580 in interest ($290 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 3.8 percent. Note: Round your intermediate calculations to the nearest whole dollar amount. a. How much interest income will he report this year if he elects to amortize the bond premium?At the beginning of his current tax year, David invests $11,550 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $820 in interest ($410 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 6.2 percent. (Round your intermediate calculations to the nearest whole dollar amount.) b. How much interest will he report this year if he does not elect to amortize the bond premium?
- Anne's marginal income tax rate is 32 percent. She purchases a corporate bond for $10,000 and the maturity. or face value, of the bond is $10,000. If the bond pays 5 percent per year before taxes, what is Anne's annual after-tax rate of return from the bond if the bond matures in 1 year? What is her annual after-tax rate of return if the bond matures in 10 years? NOTE: Round your answers to 1 decimal place. AFTER-TAX RATE: a) Bond matures in 1 year: ___________% b) Bond matures in 10 years: ____________%Annette borrows $6,000 at an annual nominal rate of 8% convertible semiannually and will repay the loan with decreasing payments every six months for 10 years. Her first payment will be P at the end of six months and each subsequent payment will be $25 less than the preceding payment.Annette makes the scheduled payments during years 1 and 2, however, she is unable to make the payments during years 3 and 4. She makes the originally scheduled payments in years 5 - 10. How much does Annette owe on the loan at the end of year 10? A2.200B3.000C 3.300D3,500E5.000Emily purchased a bond valued at $10,000 for highway construction for $4,410. If the bond pays 6.4% annual interest compounded monthly, how long must she hold it until it reaches its full face value?
- Emily purchased a bond valued at $10,000 for highway construction for $4,540. If the bond pays 7.9% annual interest compounded monthly, how long must she hold it until it reaches its full face value?Jan sold her house on December 31 and took a $10,000 mortgage aspart of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls forsemiannual payments beginning next June 30. Next year Jan must report on Schedule B ofher IRS Form 1040 the amount of interest that was included in the two payments she receivedduring the year.a. What is the dollar amount of each payment Jan receives?b. How much interest was included in the first payment? How much repayment of principalwas included? How do these values change for the second payment?c. How much interest must Jan report on Schedule B for the first year? Will her interestincome be the same next year?d. If the payments are constant, why does the amount of interest income change over time?Noah invests $600 at the end of each quarter for 30 years in an account paying 5.64% interest compounded quarterly and then he retires. Suppose that he was in the 15% bracket when the deposits were made and interest was earned. Suppose his tax bracket is now 33% in retirement. Find the current after-tax value of Noah's account if it was set-up as (i) a Traditional Individual Retirement Account (IRA): $ (ii)a Roth Individual Retirement Account (Roth-IRA): $
- David owns $30,000 worth of 10-year bonds of Ace Corporation. These bonds pay interest every 6 months at the rate of 3%/year (simple interest). How much income will David receive from this investment every 6 months? $ How much interest will David receive over the life of the bonds? $. Jan sold her house on December 31 and took a $10,000 mortgage aspart of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls forsemiannual payments beginning next June 30. Next year Jan must report on Schedule B ofher IRS Form 1040 the amount of interest that was included in the two payments she receivedduring the year.a. What is the dollar amount of each payment Jan receives?b. How much interest was included in the first payment? How much repayment of principalwas included? How do these values change for the second payment?c. How much interest must Jan report on Schedule B for the first year? Will her interestincome be the same next year?d. If the payments are constant, why does the amount of interest income change over time? Please show solution and formula. Show manual computation (not in excel or accounting calculator) Thank youSomeone in the 36 percent tax bracket can earn 7 percent annually on her investments in a tax-exempt IRA account. What will be the value of a one-time $18,000 investment in 5 years? 10 years? 20 years? You may use Appendix C to answer the questions. Do not round intermediate calculations. Round your answers to the nearest dollar. in 5 years: $ in 10 years: $ in 20 years: $ Suppose the preceding 7 percent return is taxable rather than tax-deferred and the taxes are paid annually. What will be the after-tax value of her $18,000 investment after 5, 10, and 20 years? Do not round intermediate calculations. Round your answer
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