McGraw-Hill's Taxation of Individuals and Business Entities 2019 Edition
1st Edition
ISBN: 9781259918391
Author: Professor, Brian C. Spilker
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 62P
a.
To determine
Calculate the amount of cash that will be retained by Person KT if the gain rate is 25%.
b.
To determine
Calculate the Person K’s after tax
c.
To determine
Calculate the amount of cash that will be retained by Person KT if the gain rate is 25%.
d.
To determine
Calculate the Person K’s after tax rate of return on the investment in Part (c).
e.
To determine
Calculate the amount of cash that will be retained by Person KT if the investment is hold for 15 years and then sells that when the long-term
f.
To determine
Calculate the Person K’s after tax rate of return on the investment in Part (e).
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Komiko Tanaka invests $14,500 in LymaBean, Incorporated. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term.
C. How much cash will Komiko retain, after taxes, if she holds the investment for five years and then sells when the long-term capital gains rate is 25 percent?
D. What is Komiko's after-tax rate of return on her investment in part (c)?
Komiko Tanaka invests $14,500 in LymaBean, Incorporated. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term.
How much cash will Komiko retain, after taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent?
What is Komiko's after-tax rate of return on her investment in part (a)?
Komiko Tanaka invests $13,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. a. How much cash will Komiko retain, after-taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent?
Chapter 3 Solutions
McGraw-Hill's Taxation of Individuals and Business Entities 2019 Edition
Ch. 3 - 1. The goal of tax planning is to minimize taxes....Ch. 3 - Prob. 2DQCh. 3 - In this chapter we discussed three basic tax...Ch. 3 - What are the two basic timing strategies? What is...Ch. 3 - Prob. 5DQCh. 3 - What are some common examples of the timing...Ch. 3 - What factors increase the benefits of accelerating...Ch. 3 - How do changing tax rates affect the timing...Ch. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Prob. 11DQCh. 3 - What two factors increase the difference between...Ch. 3 - What factors have to be present for income...Ch. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Explain how implicit taxes may limit the benefits...Ch. 3 - Prob. 21DQCh. 3 - Do after-tax rates of return for investments in...Ch. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - What is an implicit tax and how does it affect a...Ch. 3 - Several judicial doctrines limit basic tax...Ch. 3 - What is the constructive receipt doctrine? What...Ch. 3 - Prob. 29DQCh. 3 - Relative to arms length transactions, why do...Ch. 3 - Prob. 31DQCh. 3 - Prob. 32DQCh. 3 - Prob. 33DQCh. 3 - Prob. 34DQCh. 3 - Yong recently paid his accountant 10,000 for...Ch. 3 - Billups, a physician and cash-method taxpayer, is...Ch. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Prob. 63PCh. 3 - Prob. 64PCh. 3 - Prob. 65P
Knowledge Booster
Similar questions
- Komiko Tanaka invests $14,500 in LymaBean, Incorporated. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. How much cash will Komiko retain, after taxes, if she holds the investment for 15 years and then she sells when the long-term capital gains rate is 15 percent?arrow_forwardKomiko Tanaka invests $18,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. a. How much cash will Komiko retain, after-taxes, if she holds the investment for 5 years and then she sells it when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) b. What is Komiko’s after-tax rate of return on her investment in part (a)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.) c. How much cash will Komiko retain, after-taxes, if she holds the investment for 5 years and then sells when the long-term capital gains rate is 25 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) d. What is Komiko’s after-tax rate of…arrow_forwardKomiko Tanaka invests $18,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. How much cash will Komiko retain, after-taxes, if she holds the investment for 5 years and then sells when the long-term capital gains rate is 25 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) What is Komiko’s after-tax rate of return on her investment in part (c)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.) e. How much cash will Komiko retain, after taxes, if she holds the investment for 15 years and then she sells when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) f. What is Komiko’s after-tax rate of return on her…arrow_forward
- Sally Seashell bought a lot at the Salty Sea for $50,000 cash. She does not plan to build on the lot, but instead will hold it as an investment for 25 years. She wants a 10% after-tax rate of return after taking the 6% annual inflation rate into account. If income taxes amount to 15% of the capital gain, at what price must she sell the lot at the end of the 10 years?arrow_forwardBecky Scholes has $150,000 to invest. She wants to be able to withdraw $12,500 every year forever without using up any of her principal. What interest rate would her investment have to earn in order for her to be able to so?arrow_forwardLong time ago Lisa had put an amount of $50,000 into an investment in the securities market. Now she has $150,000 in her investment account. Required: a) If the average rate of return Lisa earned for the investment is 7.6% per year, how many years she has maintained the investment so far? b) If the Lisa would have wished to obtain the target of $150,000 within 10 years only, how much money should she put into the initial investment given the same rate of return is applied? c) Assume that Lisa would like to put the amount of $150,000 into another investment and aims for a new saving target of $500,000 to buy a new house in 12 years. How much is the rate of return should Lisa aim for to get her $500,000 after 12 year? d) Lisa has another option for her plan to buy a new house: Using $150,000 as a deposit and get a mortgage from a bank to buy the new house. ANZ bank offered Lisa the lending interest rate of 4.85% per year, compounding semi-annually. Commonwealth Bank offered…arrow_forward
- Komiko Tanaka invests $12,000 in LymaBean, Incorporated. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. Note: For all requirements, do not round intermediate calculations. Round your final dollar amounts to the nearest whole dollar and round your final percentage to 2 decimal places. Required: a. How much cash will Komiko retain, after-taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent? b. What is Komiko's after-tax rate of return on her investment in part (a)? c. How much cash will Komiko retain, after taxes, if she holds the investment for five years and then she sells when the long-term capital gains rate is 25 percent? d. What is Komiko's after-tax rate of return on her investment in part (c)? e. How much cash will Komiko retain, after taxes, if she holds the investment for 15 years and then…arrow_forwardJean invests $1000 in Year 1 in a socially responsible fund, and doubles the amount each year after that (so the investment is $1000, 2000, …). (a) If she does this for 10 years, and the investment pays 4% annual interest, what is the future worth of her investment? (b) What are socially/ethically responsible investment funds? How do they differ from other types of investments? Why do people invest in them?arrow_forwardAssume Sheryl Jenkins wants to accumulate $ 12,485.35 in two years. She currently has $ 10,809.59 to invest. What interest rate must she earn on her investment (that is, if she deposits $ 10,809.59 today) to have $ 12,485.35 exactly two years from today?arrow_forward
- Jennifer has just finished high school and is deciding whether to start working or go to college. She has already been offered a job that pays $35,000 a year. Four years of college will cost $12,000 each year. She would earn an extra $20,000 each year after she graduates for the 45 years she plans on working until she retires. Assume that the interest rate is 8.5%. What is the net present value of the decision to invest in college? O $126,154 $11,508 $136,877 $12,487arrow_forwardA long time ago Lisa had put an amount of $50,000 into an investment in the securities market. Now she has $150,000 in her investment account. Required: If the average rate of return Lisa earned for the investment is 7.6% per year, how many years she has maintained the investment so far? If Lisa would have wished to obtain the target of $150,000 within 10 years only, how much money should she put into the initial investment given the same rate of return is applied? Assume that Lisa would like to put the amount of $150,000 into another investment and aims for a new saving target of $500,000 to buy a new house in 12 years. How much is the rate of return should Lisa aim for to get her $500,000 after 12 years? Lisa has another option for her plan to buy a new house: Using $150,000 as a deposit and get a mortgage from a bank to buy the new house. ANZ bank offered Lisa the lending interest rate of 4.85% per year, compounding semi-annually. Commonwealth Bank offered her a lending rate of…arrow_forwardMarian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,760 at the end of each of the next 3 years. The opportunity requires an initial $1,190 investment of plus an additional investment at the end of the second year of $5,950 What is the NPV of this opportunity if the interest rate is per year? Should Marian take it? What is the NPV of this opportunity if the interest rate is 2.4% per year? The NPV of this opportunity is $ (Round to the nearest cent.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning