For each of the following scenarios, indicate which of the four basic tax planning variables (entity, character, time period, jurisdiction) impacts after-tax value. note that more than one variable may apply to any scenario; identify all that are relevant. a. aloha corporation is considering building a new manufacturing facility in either state u or state p. state u has a 10 percent state income tax rate. state p has a 15 percent state income tax rate but offers a tax holiday for new business investment that would exempt up to $250,000 of aloha’s earnings from state income tax for the first five years of operations in state p. b. mary wishes to her nephew, gill, pay his college tuition. instead of giving gill cash, mary gives him bonds earning $10,000 annual interest income. mary’s marginal tax rate is 35 percent, and gill’s marginal tax rate is 15 percent. c. congress has recently enacted a decrease in corporate tax rates that will take effect at the beginning of next year. grant company, a cash basis taxpayer, is planning to pay expenses prior to year-end in order to maximize its tax savings in the current year. d. will has $50,000 to invest in the stock market. he is considering two alternatives. stock a pays annual qualifying dividends of 6 percent. stock b pays no dividends but is expected to increase in value at a rate of 5 percent per year. will would hold either investment for a minimum of four years. will’s marginal tax rate on ordinary income is 35 percent.
Answers: 1
Business, 22.06.2019 06:30, coralaguilar1702
73. calculate the weighted average cost of capital (wacc) based on the following information: the equity multiplier is 1.66; the interest rate on debt is 13%; the required return to equity holders is 22%; and the tax rate is 35%. (a) 15.6% (b) 16.0% (c) 15.0% (d) 16.6% (e) none of the above
Answers: 2
Business, 22.06.2019 17:00, justyne2004
Afinancing project has an initial cash inflow of $42,000 and cash flows of −$15,600, −$22,200, and −$18,000 for years 1 to 3, respectively. the required rate of return is 13 percent. what is the internal rate of return? should the project be accepted?
Answers: 1
Business, 22.06.2019 20:30, anilauferc
You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase
Answers: 3
Business, 22.06.2019 21:30, mydoggy152
Which of the following best explains the purpose of protectionist trade policies such as tariffs and subsidies? a. they make sure that governments have enough money to pay for fiscal policies. b. they give foreign competitors access to new markets around the world. c. they allow producers to sell their products more cheaply than foreign competitors. d. they enable producers to purchase productive resources from everywhere in the world.
Answers: 1
For each of the following scenarios, indicate which of the four basic tax planning variables (entity...
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