Answer:
$84
Explanation:
Installment payment = $2,500
Interest in fourth installment = $2,458
Principal in fourth installment = $2,500 - $2,458
Principal in fourth installment = 42
Annual effective interest rate = 13%
With payments made every 2 years
Let P be the outstanding amount at after third installment is paid.
Hence the interest in the fourth installment = outstanding amount after third installment x effective annual interest rate x 2
Hence,
2,458 = P x 0.13 x 2
Hence P = 9,453.87
Using the above calculation. we can prepare an amortization schedule as shown in the table below ( in attached file)
Amount of Principal paid in the 7th installment = $84
Answer:
The answer is: After-tax rate of return = 9.8% .
Explanation:
Please find the calculations which are shown in details as below:
Pre-tax dividend earning is $0.75, Tax rate on ordinary income is 28% => After-tax dividend earning = 0.75 x (1 - 28%) = $0.54;
Pre-tax capitals gain is $3 ( that is, $33 -$30), tax rate on capital gains is 20% => After-tax capital gains = 3 x ( 1 - 20%) = $2.4 ;
=> Total after-tax return = After-tax capital gains + After-tax dividend earning = 2.4 + 0.54 = $2.94 .
Thus, in percentage term, after-tax rate of return is 2.94/30 = 9.8%.
The answer is b.
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