Vonte Company has a 25 percent tax rate. Its total interest payment for the year just ended was $22.3 million. What is the interest tax shield?
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Vonte Company has a 25 percent tax rate. Its total interest payment for the year just ended was $22.3 million. What is the interest tax shield?
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- As a company, to minimize the present worth of taxes paid to the federal government, use longest MACRS recovery period. true or false?Suppose your principal investment is $1800 and you have a nominal interest rate of 6.5%. what is your nominal interest income? Presume you are taxed at the 22% tax rate, who much will you pay in taxes and what is your after tax nominal income? Presume inflation was 2.7% during the year, what is the loss of principal due to inflation? What is your real interest income? What is after-tax real interest income?5) Tulip plc wishes to purchase a machine costing £800,000 with an expected life of four years and a residual value of £25,000. The company can claim capital allowances on a 25 percent reducing balance basis and pays corporation tax at an annual rate of 30 percent. All tax is paid one year in arrears. If Tulip plc has a cost of capital of 10 percent, what is the present value of the capital allowance tax benefits (to the nearest £1,000)? A) £199,000 B) £181,000 C) £165,000 D) £121,000
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- The State of Connecticut can currently borrow money in 10 years at 0.65% - the same yield as the US Government. Is the market saying that the State of Connecticut is as good of a counterparty risk as the Federal Government? What is the right way to evaluate this relationship? Do the calculation assuming a 20% tax bracket..Please answer the following showing detailed working: Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 31 percent. Given the above information; a) Complete the table given below for varying levels of debt below by using a mix of the given information and using your own computations. EBIT $100,000.00 Cost of debts 11% cost of equity when unlevered 18% Tax rate 31% Debts $0 $10,000.00 $20,000.00 $30,000.00 Cost of Equity when levered Equity D/E Vu VL WACC b) Plot the results from the table into the following two graphs:i) Value of the firm vis-à-vis- Total debtii) Cost of capital of the firm vis-à-vis D/E ratio.iii) Which MM propositions have you demonstrated?An investment of $1,000 earns annual interest of 5% (no capital gains). Assuming accrual taxes of 30%, the expected after-tax value of the investment in ten years is closest to: In Question 1, the tax drag in percentage terms is closest to:
- Aerotron Electronics has just bought a used delivery truck for $15,000. The small business paid $1,000 down and financed the rest, with the agreement to pay nothing for the entire first year and then to pay $576.83 at the end of each month over years 2, 3, and 4 (first payment is in 13th month). a. What nominal interest rate is Aerotron paying on the loan? % b. What effective interest rate are they paying? % Round your answer to 4 decimal places for a and b. The tolerance is ± 0.0005. c. How much of the 14th month's payment is interest? How much is principal? payment interest = $ , and principal = $ d. How much of the 18th month's payment is interest? How much is principal? payment interest = $ , and principal = $ e. How much of the 22nd month's payment is interest? How much is principal? payment interest = $ , and principal = $ Round your answers to the nearest whole dollar for c-e. The tolerance is ± 5.Suppose the interest rate is 3.9%. a. Having $350 today is equivalent to having what amount in one year? b. Having $350 in one year is equivalent to having what amount today? c. Which would you prefer, $350 today or $350 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $350 today is equivalent to having what amount in one year? It is equivalent to $. (Round to the nearest cent.)You just borrowed 5900,000 using a 25 year home loan that's interest-only for the first 2 years, and principal and interest (P) for the remaining 23 years. The interest rate is 3.72% pa compounding monthly which is not expected to change. Which of the following statements is NOT correct? Select one Oia. The effective monthly rate is 0.0031 per month, given as a decimal, if the interest rate rises, the 10 and P&d monthly payments will rise. Ob if the 10 term was one year shorter so the PS term was one year longer, then the monthly payments over the P& term would be higher O The 10 loan's perpetuity factor is 322.580645, while the Pad loan's annuity factor is 155293235 Od The 10 loan payments will be $2,790 per month, rounded to the nearest cent Qe The P& loan payments will be $4,857.17 per month, rounded to the nearest cent.
