Question
In: Finance
a. are tax-deductible, i.e., reduce the taxable income of the corporation b. to an individual become...
a. are tax-deductible, i.e., reduce the taxable income of the corporation b. to an individual become non-taxable income to that individual c. to another corporation receive preferential tax treatment (70% tax exclusion) d. to an individual become taxable income of that individual and receive 30% tax exclusion
You are comparing two annuities which offer monthly payments of $700 for five years and pay 0.6 percent interest per month. Annuity A will pay you on the last day of each month (ordinary annuity) while annuity B will pay you on the first day of each month (annuity due). Which one of the following statements is correct concerning these two annuities? a. Annuity B has a higher future value than annuity A b. Both annuities have the same future value as of ten years from today c. Annuity A has a higher future value than annuity B d. Both annuities will have zero value at the end of five years
Solutions
Expert Solution
Question summary : Future values of Ordinary annuity(Annuity A) and Annuity due ( Annuity B)
Answer : Option a : Annuity B has higher future value than Annuity A
Ordinary annuity pays on last day of a month and Annuity due pays on first day of a month'
Formula for calculating future values are :
FV of Ordinary Annuity= C × [ i (1+i) n−1]
where:C=cash flow per period i=interest rate n=number of payments
FV of Annuity Due =C × [ i(1+i)n−1] × (1+i)
The formula itself suggest that future value of Annuity Due will be higher as it is being further multiplied with 1 + i
jeff jeffy answered 1 year agoRelated Solutions
The dividends paid by a corporation a. to an individual become taxable income of that individual...
The dividends paid by a corporation
a.
to an individual become taxable income of that individual
b.
are tax-deductible, i.e., reduce the taxable income of the
corporation
c.
to another corporation receive preferential tax treatment (70%
tax exclusion)
d.
a and c
Corporate Tax Liability The Talley Corporation had taxable operating income of $435,000 (i.e., earnings from operating...
Corporate Tax Liability
The Talley Corporation had taxable operating income of $435,000
(i.e., earnings from operating revenues minus all operating costs).
Talley also had (1) interest charges of $40,000, (2) dividends
received of $25,000, and (3) dividends paid of $35,000. Its federal
tax rate was 21% (ignore any possible state corporate taxes).
Recall that 50% of dividends received are tax exempt.
What is the firm’s taxable income? Round your answer to the
nearest dollar.
$ 407,500
What is the tax...
Are any of the following expenditures deductible on an individual taxpayer’s income tax return? Explain each...
Are any of the following expenditures deductible on an
individual taxpayer’s income tax return? Explain each item.
Expenditure Amount
Cost of having income tax return prepared by a
CPA $100
Legal fee for divorce proceeding of
which 20 percent related to tax planning
advice 3,000
Lost wages for time missed from work while having income tax
return
prepared 250
Legal fee for estate planning advice of which 35 percent related
to tax planning advice 900
Cost of having federal gift tax return prepared by a...
Are these items deductible or not deductible? a. Deductible b. Not deductible ____state income taxes ____Interest...
Are these items deductible or not deductible?
a. Deductible
b. Not deductible
____state income taxes
____Interest on a 2018 mortgage loan of $750,000
____Real estate taxes
____$67 in credit card interest
____$ 576 interest on a bank loan
____FICA withheld by employer
____federal gasoline tax
____federal excise tax
____loan fee for appraisal
____local income tax
____$500 to family physician (disregard limits)
____$2000 for long term care (disregard limits)
____$400 for eye glasses (disregard limits)
____$300 for maternity clothes
____$50 donation...
____ is the base used to calculate income tax. a. taxable income b. gross income c....
____ is the base used to calculate income tax.
a. taxable income
b. gross income
c. adjusted gross income
d. economic income
An advantage of Roth IRAs a)They reduce taxable income in the year of contribution. b)They can...
An advantage of Roth IRAs
a)They reduce taxable income in the year of contribution.
b)They can be passed from generation to generation without any
estate or income tax implication.
c)One’s taxable income in retirement is reduced by the
withdrawals from the account.
d)There is no tax on Roth withdrawals in retirement when tax
rates are often higher.
Which of the following can you deduct from taxable income if you
do not itemize:
a)Medical Expenses
b)Charitable contributions.
c)Mortgage interest.
d)Property taxes...
Consider a corporation whose taxable income without state income tax is &n
Consider a corporation whose taxable income without state income
tax is
Gross revenue
$3,800,000
All expenses
$1,600,000
If the marginal federal tax rate is 35% and the marginal state
rate is 5%, compute the combined state and federal taxes using the
two methods.
State taxable income is $_________. (Round to the nearest
dollar.)
State income tax is $_________. (Round to the nearest
dollar.)
Federal taxable income is $____________. (Round to the
nearest dollar.)
Federal income tax is $__________....
Consider a corporation whose taxable income without state income tax is &n
Consider a corporation whose taxable income without state income
tax is
Gross revenue
$3,600,000
All expenses
$1,700,000
If the marginal federal tax rate is 35% and the marginal state
rate is 5%, compute the combined state and federal taxes using the
two methods.
State taxable income is $_________. (Round to the nearest
dollar.)
State income tax is $_________. (Round to the nearest
dollar.)
Federal taxable income is $____________. (Round to the
nearest dollar.)
Federal income tax is $__________....
Calculate the average tax rate for an individual with taxable income of $311, 360. Also, why...
Calculate the average tax rate for an individual with taxable
income of $311, 360. Also, why will the average tax rate almost
certainly be lower than the marginal tax rate?
Taxable Income Tax Rates
$ 0- 50,000 15%
50,001- 75,000 25%
75,001- 100,000 34%
100,001- 335,000 39%
2013 Individual Tax Rates Single Individuals If a Corporation's Taxable Income Is It Pays This Amount...
2013 Individual Tax Rates
Single Individuals
If a Corporation's Taxable Income Is
It Pays This
Amount on the
Base of the Bracket
Plus This Percentage
on the Excess over the
Base (Marginal Rate)
Average Tax
Rate at
Top of Bracket
Up to $8,925
$0
10.0%
10.0%
$8,925 - $36,250
892.50
15.0
13.8
$36,250 - $87,850
4,991.25
25.0
20.4
$87,850 - $183,250
17,891.25
28.0
24.3
$183,250 - $398,350
44,603.25
33.0
29.0
$398,350 - $400,000
115,586.25
35.0
29.0
Over $400,000
116,163.75
39.6...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 2. Tanabe-Sugano diagrams The octahedral coordination complex [Cr(brap)6]3+ has a ΔO value of 18,000 cm-1 and...
- Explain a situation you have observed (or read about) in which a firm made a decision...
- Discuss lexicons, phonology, grammar and syntax as they relate to dialects.
- Determine the profit maximizing quantity and profit levels; and then graph (in general form) the outcomes...
- Explain the relationship between risk, the expected rate of return and the actual rate of return.
- talk in two pages about the Hill Climbing and Simulated Annealing Algorithms. solve by word file...
- Consider the four distributed mutual exclusion algorithms Permission Based ---#1: Centralized Mutual Exclusion ---#2: Decentralized Mutex...
ADVERTISEMENT