FIN. MARKETS & INSTITUTIONS >CUSTOM<W/CN
FIN. MARKETS & INSTITUTIONS >CUSTOM<W/CN
7th Edition
ISBN: 9781264588916
Author: SAUNDERS
Publisher: MCG
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Chapter 5, Problem 18P

a)

Summary Introduction

To determine: Bond equivalent rate and effective annual return.

b)

Summary Introduction

To determine: Future value.

c)

Summary Introduction

To determine: Market quoted yield, bond equivalent yield and effective annual return.

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Last Chance Mine (LCM) purchased a coal deposit for $750,000. It estimated it would extract 12,000 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1 million, $3 million, and $2 million for years 1 through 3, respectively. During years 1–3, LCM reported net income (loss) from the coal deposit activity in the amount of ($20,000), $500,000, and $450,000, respectively. In years 1–3, LCM extracted 13,000 tons of coal as follows: (1) Tons of Coal (2) Basis Depletion (2) ÷ (1) Rate Tons Extracted per Year Year 1 Year 2 Year 3 12,000 $ 750,000 $ 62.50 2,000 7,200 3,800  Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year?
Assume that ACW Corporation has 2024 taxable income of $1,500,000 for purposes of computing the §179 expense. The company acquired the following assets during 2024 (assume no bonus depreciation): (Use MACRS Table 1, Table 2, and Table 5.) Asset Placed in Service Basis Machinery September 12 $ 470,000 Computer equipment February 10 70,000 Delivery truck August 21 93,000 Qualified real property (MACRS, 15 year, 150% DB) April 2 1,380,000 Total   $ 2,013,000 What is the maximum amount of §179 expense ACW may deduct for 2024? What is the maximum total depreciation that ACW may deduct in 2024 on the assets it placed in service in 2024?
Woolard Supplies (a sole proprietorship) has taxable income in 2024 of $240,000 before any depreciation deductions (§179, bonus, or MACRS) and placed some office furniture into service during the year. The furniture does not qualify for bonus depreciation. (Use MACRS Table 1, Table 2, Table 3, Table 4, and Table 5.)   Asset Placed In Service Basis Office furniture (used) March 20 $ 1,400,000  If Woolard elects the maximum amount of §179 for the year, what is the amount of deductible §179 expense for the year? What is the total depreciation that Woolard may deduct in 2024? What is Woolard's §179 carryforward amount to next year, if any?
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