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Lina20 [59]
3 years ago
10

Clayton is asking his life insurance producer about any potential taxation issues related to his $100,000 personal Whole Life po

licy. All of the following are TRUE, except:A. Since his policy is a personal policy, he cannot deduct the premiums he pays for the policyB. Annual increases in the policy's cash value are not taxable at the time they are credited to the policyC. Upon surrender of the policy, he will be taxed on any amount by which the cash value exceeds the cost basis (premiums paid) of the contractD. The interest that he pays on policy loans is tax-deductible
Business
1 answer:
Lesechka [4]3 years ago
6 0

The following are TRUE, except : The interest that he pays on policy loans is tax-deductible

Explanation:

Lifelong insurance is indeed a life insurance policy that is intended to remain in effect for the lifetime of the Insured, provided that the necessary premiums are reimbursed or on the maturity date (throughout the Commonwealth of Nation-states) and sometimes referred to as ' straight house ' or ' ordinary life'

A complete life policy offers your entire lifetime a certain amount of coverage. Once you pay the premiums, the profit will be earned on your death by your survivor. The entire policy on life always generates' cash value' as part of the money spent. The cash value can be reached as the funds rise.

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Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $120,000 or $300,000 with equal
Ivanshal [37]

Answer:

a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?

the expected value of our portfolio = ($120,000 x 50%) + ($300,000 x 50%) = $210,000

the current market price of the investment = $210,000 / 1.13 = $185,840.71

discount rate = 5% + 8% = 13%

b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return on the portfolio be?

13%, it should be equal to the discount rate

c. Now suppose you require a risk premium of 15%. What is the price you will be willing to pay now?

the current market price of the investment = $210,000 / 1.21 = $175,000

discount rate = 5% + 15% = 20%

d. Comparing your answers to (a) and (c), what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell?

the higher the risk premium, the lower the market price of the portfolio

4 0
3 years ago
The declaration and issuance of a stock dividend larger than 25% of the shares previously outstanding
lord [1]

Answer:

b. decreases retained earnings but does not change total stockholders' equity.

Explanation:

<u>a. </u>increases common stock outstanding and increases total stockholders' equity.

<u>FALSE: </u>The Equity does not change as the Retained Earnings are used to issue the Shares, so no change in the total Stockholders Equity

<u>d. </u>increases retained earnings and increase total stockholders' equity.

<u>FALSE: </u>The retained earnings are debited thus, decrease when declaring dividends

<u>c.</u> may increase or decrease paid-in capital above par but do not change total

stockholders' equity.

<u>FALSE: </u>paid in will increase or not be used, as the shares will have a minimum value for the company of his face value.

<u>b. TRUE</u> RE decrease as from there comes to the funds. The total SE does not change it change his composition.

4 0
3 years ago
Thornton Industries began construction of a warehouse on July 1, 2016. The project was completed on March 31, 2017. No new loans
igomit [66]

Answer:

THORNTON INDUSTRIES

AMOUNT OF INTEREST TO BE CAPITALIZED FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2017

2016

July 1 - Dec 31    $400,000 *4.8%*6/12 =  $9,600

Sep 30 - Dec 31  $600,000*4.8%*3/12 =   $7,200

Nov 30 - Dec 31  $600,000*4.8%*1/12 =     <u>$2,400</u>

Total Interest for 2016                              <u>  $19,200</u>

2017

Jan 1 - Dec 31   $1,600,000*4.8% =             $76,800

Jan 30 - Dec 31   $540,000*4.8%*11/12 =     <u> 23,760</u>

Total interest for the year 2017                 <u>  $100,560  </u>

weightred average cost of capital =

 <u>   $2,000,000*8%   +     $8,000,000*4%</u>

      $2,000,000 + $8,000,000

= 160,000  + 320,000

        10,000,0000

=$480,000 / 10,000,000 = 0.048 = 4.8%

Explanation:

Interest to be capitalized on construction expenditure will be interest on the amount borrowed to finance such construction. the interest will be from commencement of the construction to the cessation period

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3 years ago
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This will considerably increase the measure's precision and validity. As a result, multi-item measures are among the most essential and widely utilized tools in social research. Multiple-item scales are intended to sample a broader range of interpretations in order to capture the entire spectrum of a construct.

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7 0
1 year ago
You decide to invest in a period annuity that offers 4.5% APR compounded monthly for 20 years. How much money will you need to i
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$553,229.03 this is the answer for APEX
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