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Concept explainers
a
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : MH and JH
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: Addition of $32,000 to family annual income will affect family’s emergency fund.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
b
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : HJ and BJ
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: The amount of savings required annually for next three year to build $30,000 at an assumed rate of 3 percent.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
c
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : HJ and BJ
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: The effect of 25 percent marginal tax rate on after tax returns of H’s savings.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
d
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : HJ and BJ
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: The saving options for H that could reduce the effect of taxes on their savings program.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
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Chapter 5 Solutions
MindTap for Garman/Forgue's Personal Finance Tax Update, 13th Edition [Instant Access], 2 terms
- Define the following: Callable bond Puttable bond Zero-coupon bond Premium bond Discount bond Crossover bonds Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of EUR 1,000, 15 years to maturity, a coupon rate of 7.2%. If the yield to maturity is 6.3%, what is the current price of the bond? Rhiannon Corporation has bonds on the market with 13 years to maturity, a YTM of 7.6%, a par value of $1,000, a current market price of $1,075. The bonds make semiannual payments. What must the coupon rate be on these bonds? What would be coupon rate if the current market price is $962.68? What would be the coupon rate if the bonds make quarterly payments? Suppose that a bond has a face value of $1,000 and a YTM of 8% per annum. If the bond pays monthly coupons with an annual coupon rate of 9.6%, what will be the current price of…arrow_forwardWildcat, Incorporated, has estimated sales (in millions) for the next four quarters as follows: Q1 Q2 Q3 Sales $ 195 $ 215 $ 235 Q4 $ 265 Sales for the first quarter of the following year are projected at $210 million. Accounts receivable at the beginning of the year were $83 million. Wildcat has a 45-day collection period. Wildcat's purchases from suppliers in a quarter are equal to 50 percent of the next quarter's forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $18 million per quarter. Wildcat plans a major capital outlay in the second quarter of $98 million. Finally, the company started the year with a $84 million cash balance and wishes to maintain a $40 million minimum balance. a-1. Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per…arrow_forwardConsider the following two bonds: Bond A Bond B Face value $1,000 $1,000 Coupon rate (annual) 8% 8% YTM 9% 7% Maturity 10 years 10 years Price (PV) ? ? Calculate the price for each bond. What is the primary factor affecting the prices of the bonds? Indicate which bond is premium and which one is discount. Is there any relationship between the YTM and the coupon rate in case of premium/discount bonds? Now, consider the following two bonds: Bond X Bond Y Face value $1,000 $1,000 Coupon rate (annual) 8% 8% YTM 11% 11% Maturity 5 years 10 years Price (PV) ? ? Calculate the price for each bond. What is the relationship between bond price and maturity, all else equal? A bond with a par value of $1,000 and a maturity of 8 years is selling for $925. If the annual coupon rate is 7%, what’s the yield on the bond? What would be the yield if the bond had semiannual payments?…arrow_forward
- Don't used hand raitingarrow_forwardDon't used Ai solutionarrow_forwardAssume an investor deposits $116,000 in a professionally managed account. One year later, the account has grown in value to $136,000 and the investor withdraws $43,000. At the end of the second year, the account value is $107,000. No other additions or withdrawals were made. During the same two years, the risk-free rate remained constant at 3.94 percent and a relevant benchmark earned 9.58 percent the first year and 6.00 percent the second. Calculate geometric average of holding period returns over two years. (You need to calculate IRR of cash flows over two years.) Round the answer to two decimals in percentage form.arrow_forward
- Please help with the problem 5-49.arrow_forwardPlease help with these questionsarrow_forwardIn 1895, the first U.S. Putting Green Championship was held. The winner's prize money was $170. In 2022, the winner's check was $3,950,000. a. What was the percentage increase per year in the winner's check over this period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. If the winner's prize increases at the same rate, what will it be in 2053? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Increase per year b. Winners prize in 2053 %arrow_forward
Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning