Mr. Fuentes has $15,000 to invest. He is undecided about putting the money into tax-exempt municipal bonds paying 3.5 percent annual interest or corporate bonds paying 4.75 percent annual interest. The two investments have the same risk. Which investment should Mr. Fuentes make if his marginal tax rate is 32 percent? Would your conclusion change if Mr. Fuentes’s marginal tax rate is only 12 percent?
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- Dennis is currently considering investing in municipal bonds that earn 6 percent interests, or in taxable bonds issued by the Coca-Cola Company that pay 8 Percent. a. If Dennis tax rate is 22 percent, which bond should he choose? Municipal bonds or Taxable Bonds. b. Which bond should he chooise if his tax rate is 32 percent? Municipal bonds or Taxable bonds. c. At what tax rate would he be indifferent between the bonds? Tax rate ? d. What Strategy is this decision based Upon? Development planning strategy, Business planning strategy, Decision planning strategy, Marketing planning strategy, Conversion planning strategy, Timing strategy, Income shifting strategy.Mr. Hayes plans to pay $100,000 for one of three investment alternatives that have the same risk. The income from investment 1 would be taxed at Mr. Hayes' 24% regular tax rate, the income from investment 2 would be taxed at a 15% preferential rate, and the income from investment 3 is tax-exempt. The investments offer the following before-tax yields. • Investment 1: 8.25% • Investment 2: 7.50% • Investment 3: 6.375% Which investment should Mr. Hayes select? Group of answer choices Mr. Hayes is neutral between investment 2 and investment 3. Investment 1 Investment 2 Investment 3Assume that John's marginal tax rate is 37 percent. If a city of Austin bond pays 6.5 percent interest, what interest rate would a corporate bond have to offer for John to be indifferent between the two bonds? Question 4 Marc, & married taxpayer, earns 5640,000 in taxable income and $8,300 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2022, what is his current marginal tax rate? (Use tax rate schedule.)
- You decide to invest $27,000 in a municipal bond that earns 6.15% and is federally tax free. Your tax rate is 28%, how much have you effectively earned after ten years, assuming annual compounding? (Hint: must use two formulas to solve this question) In other words, because you are not paying taxes how much have you effectively earned?Hui is currently considering investing in municipal bonds that earn 8.55 percent interest, or in taxable bonds issued by the Coca-Cola Company that pay 11.40 percent. Required: If Hui's tax rate is 22 percent, which bond should he choose? Which bond should he choose if his tax rate is 32 percent? At what tax rate would he be indifferent between the bonds? What strategy is this decision based upon?A taxpayer is trying to decide between two investments: a State of Vermont bond that will pay 3.20% interest annually or preferred corporate stock that will pay 3.75% dividends annually. What tax-related factors should the taxpayer consider in making their investment decision?
- Evaluate the ethical issues related to the payment of income taxes. in other words, if there is a legal tax-saving strategy available to a person who earns $50,000 per year, will it be ethical for the person to utilize this strategy in order to pay less tax? State how your answer to the previous question would change if the person were making $1,500,000.Suppose that the government has a wealth tax at the rate of 2% on the assessed value of wealth. Suppose that Wendy has invested all her wealth in a private corporation. Her wealth amounts to $4,000,000 in shares of this company. Suppose that this stock delivers a dividend income of $200,000 per year. Assume there is no inflation and that interest rates are 3%. Show your work. 1. Wendy’s wealth tax liability is $___________________. 2. Wendy’s shares generate a net of tax income is $___________________ per year. 3. Suppose a Conservative party were elected on a platform of eliminating the wealth tax. The value of Wendy’s shares if the wealth tax was eliminated would be $______________. 4. The elimination of the wealth tax would reduce government tax revenue and create a budget deficit. Suppose that the country currently has no income tax, but the deficit has the government considering introducing a personal income tax that would replace the lost wealth tax revenue. A personal income…Melinda invests $200,000 in a City of Heflin bond that pays 6 percent interest. Alternatively, Melinda could have invested the $200,000 in a bond recently issued by Surething Incorporated that pays 8 percent interest and has risk and other nontax characteristics similar to the City of Heflin bond. Assume Melinda’s marginal tax rate is 25 percent. How much explicit tax would she have paid on the Surething Incorporated bond? What is her after-tax rate of return on the Surething Incorporated bond?
- I had a 50/50 chance of getting this question right and the answer is 12.2%, but I don't know how to draw that conclusion. The problem is: Would you prefer a fully taxable investment earning 12.2% or a tax exempt investment of 9.2%. Assuming a 24% tax rate. Please help me understand.Suppose that the government has a wealth tax at the rate of 2% on the assessed value of wealth. Suppose that Wendy has invested all her wealth in a private corporation. Her wealth amounts to $4,000,000 in shares of this company. Suppose that this stock delivers a dividend income of $200,000 per year. Assume there is no inflation and that interest rates are 3%. Show your work. 1. Wendy's wealth tax liability is $ 2. Wendy's shares generate a net of tax income is $ per year. 3. Suppose a Conservative party were elected on a platform of eliminating the wealth tax. The value of Wendy's shares if the wealth tax was eliminated would be $_Your employer asks you to consult on the better approach to a decision. What should the corporation pay for an asset that will return them $150,000 at the end of year 1, then zero in year 2, then $400,000 in years 3 & 4, then zero in year 5, then $200,000 in years 6-10, assuming their discount rate is 3% (ignoring taxes) ?