Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 15, Problem 2AP
Trent Inc. needs an additional worker on a multiyear project. It could hire an employee for a $65,000 annual salary. Alternatively, it could engage an independent contractor for a $72,000 annual fee. If Trent’s income tax rate is 21 percent, which option minimizes the after-tax cost of obtaining the worker?
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Trent, Incorporated needs an additional worker on a multiyear project. It could hire an employee for a $65,000 annual salary.
Alternatively, it could engage an independent contractor for a $72,000 annual fee. Trent's income tax rate is 21 percent.
Required:
Compute the annual after-tax cost of each option and indicate which minimizes the after-tax cost of obtaining the worker.
Note: Round all your intermediate calculations to the nearest whole dollar amount.
After-tax cost of employee
After-tax cost of independent contractor
Option that minimizes after-tax cost
You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs
$150 initially, and then requires $105 per year in maintenance costs. Machine B costs $220 initially, has a life of three years, and
requires $170 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine.
The discount rate is 13 percent and the tax rate is zero. Calculate the EAC.
Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.
Machine A
Machine B
Which one should you choose?
Machine B
EAC
Machine A
You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs
$140 initially, and then requires $115 per year in maintenance costs. Machine B costs $210 initially, has a life of three years, and
requires $160 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine.
The discount rate is 12 percent and the tax rate is zero. Calculate the EAC.
Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.
Machine A
Machine B
EAC
Chapter 15 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 15 - Prob. 1QPDCh. 15 - Prob. 2QPDCh. 15 - Prob. 3QPDCh. 15 - Discuss the practical reasons why the tax law...Ch. 15 - Prob. 5QPDCh. 15 - Mr. Burnett owns 10 percent of the stock of ABC...Ch. 15 - This year, publicly held Corporation DF paid its...Ch. 15 - Mr. Zelig was recently promoted to an executive...Ch. 15 - Prob. 9QPDCh. 15 - Prob. 10QPD
Ch. 15 - Prob. 11QPDCh. 15 - Prob. 12QPDCh. 15 - Prob. 13QPDCh. 15 - Prob. 14QPDCh. 15 - Greg Company agreed to pay Ms. Bilko 45,000...Ch. 15 - Trent Inc. needs an additional worker on a...Ch. 15 - Prob. 3APCh. 15 - Mr. and Mrs. Brock own a bakery. Their marginal...Ch. 15 - Mr. and Mrs. Soon are the sole shareholders of SW...Ch. 15 - Prob. 6APCh. 15 - Mrs. Flay, age 57, participates in the group term...Ch. 15 - Mrs. Ellers corporate employer has a cafeteria...Ch. 15 - Mr. Nixon and Mr. Ryan are employed by HD Inc.,...Ch. 15 - Peet Company provides free on-site day care for...Ch. 15 - This year, Faro Inc., a calendar year taxpayer,...Ch. 15 - Prob. 12APCh. 15 - Prob. 13APCh. 15 - Prob. 14APCh. 15 - Refer to the facts in the preceding problem. Five...Ch. 15 - Prob. 16APCh. 15 - Prob. 17APCh. 15 - Prob. 18APCh. 15 - Prob. 19APCh. 15 - Prob. 20APCh. 15 - Prob. 21APCh. 15 - Prob. 22APCh. 15 - Prob. 23APCh. 15 - Prob. 24APCh. 15 - Prob. 25APCh. 15 - Prob. 26APCh. 15 - Prob. 27APCh. 15 - Refer to the facts in the preceding problem Assume...Ch. 15 - Prob. 29APCh. 15 - Prob. 30APCh. 15 - What is the maximum IRA contribution that Mr....Ch. 15 - Prob. 32APCh. 15 - Ms. Ray is age 46 and single. Her employer made a...Ch. 15 - Mr. and Mrs. Davos file a joint tax return. Each...Ch. 15 - Mr. and Mrs. Mario, ages 39 and 35, file a joint...Ch. 15 - Prob. 36APCh. 15 - Prob. 37APCh. 15 - Prob. 38APCh. 15 - Prob. 39APCh. 15 - Prob. 40APCh. 15 - Prob. 41APCh. 15 - Prob. 1IRPCh. 15 - Prob. 2IRPCh. 15 - Prob. 3IRPCh. 15 - Prob. 4IRPCh. 15 - Prob. 5IRPCh. 15 - Prob. 6IRPCh. 15 - Prob. 7IRPCh. 15 - Prob. 8IRPCh. 15 - Prob. 9IRPCh. 15 - Prob. 10IRPCh. 15 - Prob. 11IRPCh. 15 - Prob. 12IRPCh. 15 - Prob. 13IRPCh. 15 - Prob. 14IRPCh. 15 - Prob. 15IRPCh. 15 - Prob. 1RPCh. 15 - Prob. 2RPCh. 15 - Prob. 3RPCh. 15 - Prob. 4RPCh. 15 - This year, Mr. Joss accepted a job with BL Inc. He...Ch. 15 - Mr. Remling is entitled to a 5,200 bonus this year...Ch. 15 - Prob. 3TPCCh. 15 - Prob. 4TPC
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