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Business

Accounting

credit reduce your taxe

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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Suppose you are in the 25% marginal tax bracket and earn $15,000. Then a tax credit of $1500 will reduce your tax bill by how much?
2) Suppose the income tax rate schedule is O percent on the first $10,00O; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns $32,000 a year and Family B earns $70,000 a year. Both families each receive a ten percent raise. What is the marginal tax rate of each and what is the extra tax paid by each after the raise? 3) "Only in a progressive tax system does the amount of taxes increase as income increases." Do you agree or disagree? Explain.
You purchase a backpack for $24.95, a calculator for $34.55, and a notebook for $1.50. If the sales tax rate is 12%, how much will you pay in total including tax?
Q1: An engineering graduate plans to buy a home. She has been advised that her monthly house and property tax payment should not exceed 34% of her disposable monthly income. After researching the market, she determines she can obtain a 25-year home loan for 6.95% annual interest per year, compounded monthly. Her monthly property tax payment will be approximately $175. What is the maximum amount she can pay for a house if her disposable monthly income is $2400?
a. Andrea wants to know how much money she will have in 6 years if she deposits her $900 tax refund now and then deposits an additional $60 per month in her account that pays an APR of 1.5% compounded monthly. Use Excel to determine how much money will Andrea have in the account in 6 years? $ b. If Andrea changes her mind and decides that instead of setting aside $60 per month she wants to know how much she will have to deposit each month to save up a total of $7500, we can use goal seek to find the value for PMT which yields $7500 at the end of 6 years. How much money will Andrea need to deposit per month?
1) If you were to save and invest $1,000 a month in after-tax dollars and earn 6% before taxes annually, how much would you have at the end of 10 years, 20 years and 40 Years? Assume you had an effective tax rate on your investments of 30%. 2) If you were to invest $1,000 a month in pre-tax dollars in a 401K plan and earn 6% before taxes annually, how much pre-tax money would you at the end of 10 years, 20 years and 40 Years? 3) Assuming you had saved $2.0 million in your 401K pre-tax, how many years would it last if you withdrew 100K per year and you continued to earn 4%before taxes annually on any balances prior to withdrawal? How much would you owe in taxes if your retirement tax rate was 25%? How much would you have to meet expenses?
4.Ben and Jen are looking at a home that has an annual property tax of $3700 and an average heating cost of $225.00 per month. Ben on average works 40 hours per week and makes $40.70 per hour. Jen receives a salary of $4050.00 per month. a. According to the GDSR formula, what is the maximum monthly mortgage payment they can afford? b. What price how house could they afford if they have a down payment of $25 000 saved up and take a mortgage for 25 years with monthly payments at an interest rate of 3.5% compounded monthly?
TAX SAVINGS. You pay $3000 per month on your mortgage. How much additional tax savings will you realize if $800 of the monthly mortgage payment is interest and your tax bracket is 12 percent?
A buyer earns $48,000 salary per year. In order to qualify for an 85 percent loan, his monthly PITI payment cannot be more than 28 percent of his monthly salary. The annual taxes and insurance will be $2,352.60. If the monthly principal and interest payment is $6.00 per $1,000 of loan amount, what is the most sales price he can afford?
A 401(k) plan is a retirement plan offered by many companies. Such plans are tax-deferred savings vehicles, meaning that any deposits you make into the plan are deducted from your current pretax income, so no cur- rent taxes are paid on the money. For example, assume your salary will be $50,000 per year. If you contribute $3,000 to the 401(k) plan, you will only pay taxes on $47,000 in income. There are also no taxes paid on any capital gains or income while you are invested in the plan, but you do pay taxes when you withdraw money at retirement. As is fairly common, the company also has a 5 percent match. This means that the company will match your contribution up to 5 percent of your salary, but you must contribute to get the match. CHAPTER 10 Risk and Return: Lessons from Market History 313 PART 3 Risk and Return The 401(k) plan has several options for investments, most of which are mutual funds. A mutual fund is a portfolio of assets. When you purchase shares…
6) Susan is looking to purchase her first home five years from today. The house costs $1,550,000. She will have to make a down payment of 10% of this amount and plans to take a loan from the bank for the difference. Bank charges are approximately 15% of the loan amount. She plans to start saving from today to cover both the down payment and the bank charges. a. How much will she need to save to cover both the down payment and bank charges? b. If she currently has $195,000 in her account and will make no further deposits over the next five years, what rate of interest must she earn on this account in order to achieve the savings target calculated in part (a) above?
Suppose you are a manager for a certain company. You earn $50,000 per year and are in the 28% federal income tax bracket. Each year you contribute $5,500 tax free to your individual retirement account, IRA. The account earns 7% annual interest. In addition, the amount of tax that you save each year by making these "pre-tax" contributions is invested in a taxable aggressive growth mutual fund averaging 16%. a)How much tax do you save (in $) each year by making the retirement fund contributions? b)Using Table 12-1, much will the retirement fund be worth (in $) in 30 years? (Round your answer to the nearest cent.) c) Although the income from this investment is taxable each year, using Table 12-1, how much will the "tax savings" fund be worth (in $) in 30 years? (Round your answer to the nearest cent.)