Answer:
$875,100
Explanation:
The values given in the question are as follows
Purchase price of land= $820,000
Title insurance= $1,200
Property taxes= $10,400
Amont of tax due for the current fiscal year= $3,200
Back taxes= $7,200
Cost of removing the building= $41,000
Salvaged materials= $5,600
Amount used to level the land= $11,300
The cost of land for McCoy's fish house can be calculated as follows
Total cost of land= Puchase price of land+Title insurance+Back property taxes+Cost of removing the building+Level the land-Salvage materials
$820,000+$1,200+$7,200+$41,000+$11,300-$5,600
= $875,100
Hence the total amount McCoy fish house should record as the cost of land is $875,100
In economics, activities done for others, such as providing house cleaning or dental work, are referred to as services. Tangible merchandise on the other hand are referred to as goods. When firms produce services at the lowest cost p<span>roductive efficiency is achieved.</span>
Answer:
To calculate the after-tax cost of debt, multiply the before-tax cost of debt by <u>(1 - tax rate)</u>.
Water and Power Company (WPC) can borrow funds at an interest rate of 10.20% for a period of four years. Its marginal federal-plus-state tax rate is 45%. WPC's after-tax cost of debt is <u>= 10.20% x (1 - 45%) = 5.61%</u>.
At the present time, Water and Power Company (WPC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?
<u>B. 4.47%</u>
pre-tax cost of debt = bond's yield to maturity
approximate YTM = {120 + [(1,000 - 1,329.55)/15] / [(1,000 + 1,329.55)/2] = 98.03 / 1,164.775 = 0.08416 = 8.416%
approximate after tax cost of debt = 8.4% x (1 - 45%) = 4.62 = 4.62
since I used the approximate yield to maturity, my answer is not exact. That is why I have to look for the closest available option.
Answer: A. No capital gain or loss
Explanation:
From the question, we are informed that a customer buys $100,000 of 30 year corporate bonds with 20 years remaining to maturity at 95 and that the customer elects not to accrete the discount annually.
At maturity, the customer will have no capital gain or loss. This is because, in this case, the bond has already been held to maturity and discount have therefore been accreted. There won't be capital loss or gain since the bond will noe to redeem at par.
