$30 per share, holds the shares for 5 years, and sells them for $65. (Hint: Find the holding period return and divide the number of years in the holding period.) The annualized rate of return is ☐ %. (Round to two decimal places.) What is his after-tax rate of return if he is in the 25 percent marginal tax bracket? The tax due is $. (Round to the nearesircent.) The after-tax rate of return is %. (Round to two decimal places.)

$30 per share, holds the shares for 5 years, and sells them for $65. (Hint: Find the holding period return and divide the number of years in the holding period.) The annualized rate of return is ☐ %. (Round to two decimal places.) What is his after-tax rate of return if he is in the 25 percent marginal tax bracket? The tax due is $. (Round to the nearesircent.) The after-tax rate of return is %. (Round to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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: ____________%
1. Juanita inherits $10,000 and invests it for 30 years at a “net” 9% return. How much money will she have at the end of the period?
Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable quarterly. They will re-invest the dividends in a savings account which presently earnes 3% compounded yearly. They expect the stock will reach a selling price of $44000 in 4 years. Assume a regular income marginal tax rate of 43%, and a dividend marginal tax rate of 17.4 5%, and a capital gains marginal tax rate of 21.5%. What is the after-tax EAR of this tock? Assume taxation is paid annually for the interests and dividends.
Your company sponsors a 401(k) plan into which you deposit 10 percent of your $120,000 annual Income. Your company matches 75 percent of the first 10 percent of your earnings. You expect the fund to yield 12 percent next year. Assume you are currently in the 31 percent tax bracket. a. What is your annual Investment in the 401(k) plan? (Round your answer to 1 decimal place. (e.g., 32.1)) b. What is your one-year return? (Round your answer to 3 decimal places. (e.g., 32.161)) a. Annual investment b. One-year return 184.000 %
Komiko Tanaka invests $13,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. a. How much cash will Komiko retain, after-taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent?
You bought a 5-year property class equipment for $20,000.00 and sold it after 3 years. Assume that the selling price of the equipment decreases uniformly by 5% each year. The equipment generated following income: $5,000, $5,500, and $4,500 in years 1 through 3, respectively. 5. Fill up the table below to show the after tax cash flow. Assume that you are already in the 28% income tax bracket. Use MACRS depreciation. Assume that depreciation recapture/loss is taxed at 15%. After tax cash flow Yr. Income Depreciation Таxable Income Income Тах b) Write down the equation to determine the after tax rate of return. DO NOT compute the rate of return.
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 $4,500 tax free to your individual retirement account, IRA. The account earns 6% 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? $ 1260 (b)Using Table 12-1, much will the retirement fund be worth (in $) in 30 years? (Round your answer to the nearest cent.) $ ?
Willie invests some money at 7.5%. He also invests $4,000 less than this amount at 6.59. His total annual incomefrom the interest of these two investments is $1,000. How much money is invested at each rate?
Emily is holding shares of stock A with market value of $100,000 that includes unrealized capital gains of $20,000. Tax rate on realized capital gains is 25%. Stock A is expected to earn annual return of 6.5% in the future. Stock B is expected to earn an 8.7% annual return in the future. What will be the after-tax value of switching to stock B now at the end of the holding period of three more years? Below 109,000 Between 109,000 and 110,500 Between 110,500 and 112,000 Between 112,000 and 113,500 Between 113,500 and 115,000 Above 115,000
The Touche family took out $243,000, 20-year mortgage at an APR of 4.24%. The assessed value of their home is $9,700 and the annual tax rate is 90% of assessed value. What is the annual property tax?
Marwin wishes to earn 7% on his capital after payment of taxes. If the income from an available investment will be taxed at an average rate of 42%, what minimum rate of return, before payment of taxes, must the investment offer to be justified.
Four years ago, Leroy invested $12,600.00. Today, he has $20,700.00. If Leroy earns the same annual rate implied from the past and current values of his invsetment, then in how many years from today does he expect to have exactly $50,600.00 O 7.20 years (plus or minus 0.05 years) 7.57 years (plus or minus 0.05 years) O 6.25 years (plus or minus 0.05 years) 11.20 years (plus or minus 0.05 years) None of the above is within .05 percentage points of the correct answer

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