Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 15, Problem 5P
To determine
Calculate the after tax cost of debt.
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If the federal tax rate is 36% and the state tax rate is 7%, the effective tax rate is closest to: (a) 40.5% (b) 37.3% (c) 35.4% (d ) 31.8%
If AD excess equals $40 billion and the MOC equals 0.75 , then the disired fiscal restraint equals ....
(a) $160 billion
(b) $30 billion
(c) $53.33 billion
(d) $10 billion
Assuming a 6% sales tax is levied on all consumption, complete the following table, answers (a) through (h) and answer the question below
Income
Consumption
Sales Tax
Percent of Income paid in taxes
$30,000
$14,000
(a)
(e)
$40,000
$16,000
(b)
(f)
$50,000
$18,000
(c)
(g)
$60,000
$20,000
(d)
(h)
Is the sales tax progressive, regressive or proportional? Explain.
Chapter 15 Solutions
Contemporary Engineering Economics (6th Edition)
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Similar questions
- Suppose for some year the income of a small company is $110,000; the expenses are $65,000; the depreciation is $25,000; and the effective income tax rate = 40%. For this year, the ATCF is most nearly (a) −$8,900 (b) $4,700 (c) $13,200 (d) $29,700 (e) $37,000.arrow_forwardThe Parkview Hospital is considering the purchase of a new autoclave. This equipment will cost $150,000. This asset will be depreciated using an MACRS (GDS) recovery period of three years. Use this information to solve, The depreciation amount in the second year is (a) $50,000 (b) $66,675 (c) $33,338(d) $55,563.arrow_forwardA graduated income tax system means: (a) Only taxable incomes above a certain level pay any taxes (b) A higher flat rate goes with all of the taxable income (c) Higher tax rates go with higher taxable incomes (d ) Rates are indexed each year to keep up with inflationarrow_forward
- A small engineering firm has borrowed $125,000 at 8%. The partners have invested another $75,000. If the partners require a 12% rate of return, what is the firm’s cost of capital: (a) Before taxes? (b) After taxes with a tax rate of 21%?arrow_forwardIf the after-tax ROR is 11.4% and the corporate Te is 39%, the approximate before-tax rate of return is closest to: (a) 6.8% (b) 15.4% (c) 18.7% (d ) 19.7%arrow_forwardSuppose that you placed a commercial building (warehouse) in service inJanuary. The cost of property is $300,000, which includes the $100,000 value of land. Determine the amount of depreciation that is allowed during the first year of ownership.(a) $7,692(b) $5,128(c) $7,372(d)$4,915arrow_forward
- Which of the following statements is most correct?(a) Working capital measures the company's ability to repay current liabilities using only current assets.(b) The days sales outstanding (DSO) represents the average length of time that the firm must wait after making a sale before receiving cash.(c) The lower debt ratio, the more the protection afforded creditors in the event of liquidation.( d) All of the above.arrow_forwardAccordingtothetextbook,whichofthefollowingstatementsis(are)correct? (x) When a taxpayer attempts to legally reduce her tax liability, she is engaging in “tax evasion” and when an individual fraudulently avoids paying taxing, she is engaging in “tax avoidance”. (y) One tax system is considered more efficient than another if it raises the same amount of tax revenue at a lower cost to taxpayers. (z) Part of the administrative burden of a tax is associated with the headache of filling out tax forms imposed on taxpayers who comply with the tax. (x), (y) and (z) (x) and (y) only (x) and (z) only (y) and (z) only (x) onlyarrow_forwardPersonal income tax rates in South Africa, 2015/16 Taxable income Tax Payable Rand 0-181 900 181 901-284 100 284 101-393 200 393201-550 100 550 101-701 300 701 301 and above 18% of each R1 +26% of the amount above R181 900 +31% of the amount above R284 100 +36% of the amount above R393 200 +39% of the amount above R550 100 + 41% of the amount above R701 300 R 32 742 R 59 314 R 93 135 R 149 619 R 208 587 Use the table above to: Calculate income tax of an individual if income is R170 000 Calculate income tax of an individual if income is R350 000arrow_forward
- Depreciation can be regarded as all the following except a. An accounting concept b. Decrease in value of an asset due to usage and time c. A cash deduction that is reinvested at the MARR d. A tax saving measure on financial statements After you have conducted a future worth comparison of alternatives, what factor do you multiply the FW values by in order to obtain the AW values of the alternatives? a. (F/A, i, n) b. (F/P, i, n) c. (A/P, i, n) d. (A/F, i, n)arrow_forwardThe Sherman Antitrust Law was originally designed to prevent the formation of large corporations or cartels that could dominate the market. (T/F)arrow_forwardI want these B/C; after tax analysis to be computedarrow_forward
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