Wilcox Corporation won a settlement in a lawsuit and was offered four different payment alternatives by the defendant's insurance company. A review of interest rates indicates that 8% is appropriate foranalyzing this situation. Ignoring any tax considerations, which one of the following four alternatives should the controller recommend to Wilcox management?Select one:a. $5,000 now and $20,000 per year at the end of each of the next ten yearsb. $5,000 now and $5,000 per year at the end of each of the next nine years, plus a lump-sum payment of $200,000 at the end of the tenth yearc. $135,000 nowd. $40,000 per year at the end of each of the next four years ×

Given these calculations, the controller should recommend Option A, as it has the highest present…

Answered: Wilcox Corporation won a settlement in…

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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Your brother's business obtained a 30-year amortized mortgage loan for $300,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for Year 1? Oa. $20,903.46 O b. $19,169.71 O c. $3,047.43 O d. $21,000.00 O e. $23,950.89
Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?
Tobias has a brokerage account and buys on the margin, which resulted in an interest expense of $29,200 during the year. Income generated through the brokerage account was as follows: Municipal interest $58,400 Taxable dividends and interest 292,000 If required, round any division to two decimal places and use in subsequent computation. Round your final answer to the nearest dollar. How much investment interest can Tobias deduct?
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Apollo Enterprises has been awarded an insurance settlement of $4,000 at the end of each 6 month period for the next 12 years. (Round your answers to the nearest cent.) (a) As the accountant, calculate how much (in $) the insurance company must set aside now at 6% interest compounded semiannually to pay this obligation to Apollo. (b) How much (in $) would the insurance company have to invest now if the Apollo settlement was changed to $2,000 at the end of each 3 month period for 12 years and the insurance company earned 8% interest compounded quarterly? (c) How much (in $) would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3 month period rather than at the end? $
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.
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niya has been awarded annual payments in the amount of $15,000.00 for 16 years with 4% compounded annually. how much does niya put down today to have for 7 in years? look at the image for the full question!
Apollo Enterprises has been awarded an insurance settlement of $3,000 at the end of each 6 month period for the next 11 years. (Round your answers to the nearest cent.) (a) As the accountant, calculate how much (in $) the insurance company must set aside now at 6% interest compounded semiannually to pay this obligation to Apollo. $ (b) How much (in $) would the insurance company have to invest now if the Apollo settlement was changed to $1,500 at the end of each 3 month period for 11 years and the insurance company earned 8% interest compounded quarterly? $ (c) How much (in $) would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3 month period rather than at the end? $

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