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 2 years 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
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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 $40,000, (2) dividends
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Recall that 50% of dividends received are tax exempt.
What is the firm’s taxable income? Round your answer to the
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$ 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...
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a. Deductible
b. Not deductible
____state income taxes
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____Real estate taxes
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____FICA withheld by employer
____federal gasoline tax
____federal excise tax
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____ 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
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 $__________....
An advantage of Roth IRAs a)They reduce taxable income in the year of contribution. b)They can...
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a)They reduce taxable income in the year of contribution.
b)They can be passed from generation to generation without any
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c)One’s taxable income in retirement is reduced by the
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Which of the following can you deduct from taxable income if you
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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...
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