The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 9 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 15 percent higher, that is, firms that paid 11 percent for debt last year will be paying 12.65 percent this year. a. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on Its cost last year and the 15 percent increase? Note: Do not round Intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Aftertax cost of debt % b. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be? Note: Do not round Intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Aftertax cost of debt %
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- The Goodsmith Charitable Foundation, which is tax- exempt, issued debt last year at 8 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 25 percent higher; that is, firms that paid 10 percent for debt last year will be paying 12.50 percent this year. a. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year and the 25 percent increase? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of debt % b. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 30 percent because of involvement in political activities), what would the aftertax cost of debt be? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of debt %A student has borrowed $27,500 in Perkins loans (available to students with exceptional need). The rate on the loan is 5% and the government has paid the interest while the student has been in school. To simplify the calculations assume annual tuition and loan payments. What are the differences in the payment amount and the total paid if the student pays the loan back in 5 years and in 20 years? Is the availability of the student loan interest likely to reduce the after-tax cost of the loan?The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 10 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 30 percent higher; that is, firms that paid 12 percent for debt last year will be paying 15.60 percent this year. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year and the 30 percent increase? (Do not round intermediate calculations. Input the answer as a percent rounded to 2 decimal places.) If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be? (Do not round intermediate calculations. Input the answer as a percent rounded to 2 decimal places.)
- Spherical Manufacturing recently spent $15 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 30% and Spherical's marginal corporate tax rate is 29%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 8% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 8% per year? e. How might your answer to part (d) change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years? a. What are the annual CCA deductions associated with this equipment for the first five years? The CCA deduction for year 1 is $ (Round to the nearest dollar.)Spherical Manufacturing recently spent $15 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 30% and Spherical's marginal corporate tax rate is 36%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 12% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 12% per year? e. How might your answer to part (d) change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years? a. What are the annual CCA deductions associated with this equipment for the first five years? The CCA deduction for year 1 is $ (Round to the nearest dollar.) Question ViewerSpherical Manufacturing recently spent $19 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 45% and Spherical's marginal corporate tax rate is 28%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 10% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 10% per year? e. How might your answer to part (d) change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years?
- Spherical Manufacturing recently spent $16 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 45% and Spherical's marginal corporate tax rate is 34% a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 12% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 12% per year? e. How might your answer to part (d) change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years? a. What are the annual CCA deductions associated with this equipment for the first five years? The CCA deduction for year 1 is $3600000 (Round to the nearest dollar) The CCA deduction for year 2 is $ (Round to the…Spherical Manufacturing recently spent $11 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 45% and Spherical's marginal corporate tax rate is 37%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 10% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 10% per year? e. How might your answer to part (d) change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years? a. What are the annual CCA deductions associated with this equipment for the first five years? The CCA deduction for year 1 is $ (Round to the nearest dollar.) The CCA deduction for year 2 is $ The CCA deduction for…Spherical Manufacturing recently spent $18 million to purchase some equipment used in the manufacture of disk drives. This equipment has a CCA rate of 45% and Spherical's marginal corporate tax rate is 39%. a. What are the annual CCA deductions associated with this equipment for the first five years? b. What are the annual CCA tax shields for the first five years? c. What is the present value of the first five CCA tax shields if the appropriate discount rate is 12% per year? d. What is the present value of all the CCA tax shields assuming the equiment is never sold and the appropriate discount rate is 12% per year? e. How might your answer to part (d) change if Spherical anticipates that its marginal corporate tax rate will increase substantially over the next five years? CHOD a. What are the annual CCA deductions associated with this equipment for the first five years? The CCA deduction for year 1 is $ 4,050,000. (Round to the nearest dollar) The CCA deduction for year 2 is $. (Round…
- Mr. Fox gets a loan from the bank. Total amount : $ 20,000. The bank is granting loans for an annual interest of 10%. The $20,000 will serve to finance a project in the mountains. An initial payment is to be blocked an not used ($ 1,000) and the rest will be used for working capital. Tax rate is 2%. What would be the cost of debt for Mr. Fox? If the bank didn't receive back the entire money, what kind of risk is facing Mr. Fox? What would be the value of the blocked amount in 3 Years, if inflation rate is 5%?The Odessa Supply Company is considering obtaining a loan from a sales finance company secured by inventories under a field warehousing arrangement. Odessa would be permitted to borrow up to $350,000 under such an arrangement at an annual interest rate of 10 percent. The additional cost of maintaining a field warehouse is $17,000 per year. Assume that there are 365 days per year. Determine the annual financing cost of a loan under this arrangement if Odessa borrows the following amounts: $350,000. Round your answer to two decimal places. % $320,000. Round your answer to two decimal places. %The municipality of Smallville has arranged to borrow $30 million in order to implement several public projects (flood control, school security, etc.). The interest rate will be 3% per year, payable at the end of each year. This $30 million debt will be retired by making payments of $5 million at the end of each year. The Board of Supervisors is concerned that it will take too long to pay off this debt. How many years will it take to retire this $30 million debt and its associated interest payments?