A step out is a pricing practice in which a firm:

LNS Corporation generated a minimum tax credit of $100,000 in 2017. LNS has a regular tax liability of $80,000 in 2018. How much

erik [133]

Answer:

$10,000

Explanation:

Calculation for How much of the 2017 minimum tax credit is refundable to LNS in 2018

Refundable minimum tax credit=($100,000-$80,000)*50%

Refundable minimum tax credit=$20,000*50%

Refundable minimum tax credit=$10,000

Note that the 50% represent the refund of the minimum tax credit that is still remaining

Therefore How much of the 2017 minimum tax credit is refundable to LNS in 2018 will be $10,000

5 0

3 years ago

Bartlett Car Wash Co. is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $53,0

Virty [35]

Answer:

Accounting rate of return = 10.39%

Payback period = 4.62 years

Explanation:

The computations are shown below:

For accounting rate of return, it equal to

= Annual net income ÷ Investment

= $53,000 ÷ $510,000

= 10.39%

For payback period, it would be

= Initial investment ÷ Net cash flow

where,

Initial investment is $263,000

And, the net cash flow = annual net operating income + depreciation expenses

= $53,000 + $57,500

= $110,500

The depreciation expense would be

= (Original cost - residual value) ÷ (useful life)

= ($510,000 - $50,000) ÷ (8 years)

= ($460,000) ÷ (8 years)

= $57,500

Now put these values to the above formula

So, the value would equal to

= ($510,000) ÷ ($110,500)

= 4.62 years

4 0

3 years ago

Donald's home was recently destroyed by a fire. He made an insurance claim for $250,000. Who is responsible for paying him the $

artcher [175]

The insurer is the one responsible

4 0

3 years ago

Time value An Iowa state savings bond can be converted to $750 at maturity 5 years from purchase. If the state bonds are to be

Elden [556K]

Answer:

$78.35

Explanation:

Given:

Future value = $750

Maturity time = 5 years

Annual rate = 5%

Now,

Future value = P × ( 1 + r )ⁿ

Where, P is the present value of the bonds

r is the rate of interest

n is number of periods

on substituting the values, we get

$100 = P × ( 1 + 5% )⁵

or

$100 = P × ( 1.05 )⁵

or

P = $78.35

Hence, the state should sell its bond at a price of $78.35

4 0

3 years ago

Samantha opened a savings account this morning. Her money will earn 5 percent interest, compounded annually.After five years, he

Valentin [98]

Answer:

Samantha could have deposited less money and still had $5,600 in five years if she could have earned 5.5 percent interest

Explanation:

Giving the following information:

Her money will earn 5 percent interest, compounded annually. After five years, her savings account will be worth $5,600.

First, we will calculate the original deposit. Then, we will tackle each statement and find the true one.

PV= FV/(1+i)^n

PV= 5,600/ (1.05^5)= $4,387.75

a. Samantha deposited more than $5,600 this morning. False, we just prove that she deposit less than 5,600

b. Samantha could have deposited less money and still had $5,600 in five years if she could have earned 5.5 percent interest. <u>True. The higher the interest rate, in the same period the higher the ending value or lower the present value. </u>

c. The present value of Samantha's account is $5,600. False, the final value is $5,600.

d. Samantha would have had to deposit more money to have $5,600 in five years if she could have earned 6 percent interest. False, she would have to deposit less than $5,600

e. Samantha will earn an equal amount of interest every year for the next five years. False. Because interest gets capitalized, each year the interest earned is higher.

8 0

4 years ago