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Alja [10]
3 years ago
6

Assume your required internal rate of return on similar investments is 11 percent. What is the net present value of this investm

ent opportunity? What is the going-in internal rate of return on this investment? Should you make the investment?
Business
1 answer:
Ksivusya [100]3 years ago
8 0

Answer:

Hello some parts of your question is missing attached below are the missing parts

You are considering the purchase of a small income-producing property for $150000 that is expected to produce the following net cash flows

End of year           cash flow

1                                 $50000

2                                $50000

3                                $50000

4                                $50000

Answer : a) $5122.28  (b)  12.59%  (c) You should make the investment

Explanation:

Internal rate of return = 11 %

initial cash flows = $150000

period = 4 years

Find the NPV (net present value )( using present value tables)

= preset value of cash flows - initial cash flows

= ∑ present cash flows for 4 years - $150000

= $155122.28 - $150000 = $5122.28

The going-in internal rate of return on investment

N (number of years ) = 4

pv  ( present value ) = $150000

PMT = -$50000

Fv ( future value ) = 0

IRR = 12.59% ( making use of the cash flow list in our financial calculator )

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5 0
3 years ago
Juan was considering purchasing an interest in a tax-exempt bond fund for $100,000 when he discovered that the interest must be
myrzilka [38]

Answer:

The double-exempt bond is the preferred investment because it has a higher after-tax return Tax benefit .

Explanation:

Calculatation of the after-tax return on both bonds

1)The double-exempt bond does not pay state or federal income taxes.

After-tax return =

Before-tax return = 4.9%

2)The tax-exempt bond is the state income taxes, but not federal in which the states can decide whether to tax their bonds or not.

Interest Income (100,000 * 5%) 5,000

Less: State taxes at 10% (5,000* 10%) (500)

Tax benefit from deduction of state taxes on federal return (500 * 35%) 175

After-tax Income 4,675

After-tax return = 4,675/100,000 = 4.675%

Therefore the double-exempt bond is the preferred investment because it has a higher after-tax return Tax benefit .

Hence the state income tax will be deductible on Juan’s federal tax return and Juan’s federal taxable income will be lower or lesser by $500 which will produces tax savings at his federal marginal tax rate of $500 * 35% = $175.

4 0
3 years ago
Reggie who is 55, had adjusted gross income of $32,000 in 2020. During the year, he paid for the following medical expenses:
sleet_krkn [62]

Assuming Reggie who is 55, had an adjusted gross income of $32,000 in 2020, Reggies medical expense deduction will be $75

Calculation to determine Reggie medical expense deduction

Drugs  $500

Add Health insurance premium-after tax $850

Add Doctors fees $1,250

Add Eye glasses $375

Total expenses  $2,975

($500+$850+$1,250+$375)

Less Insurance reimbursement  ($500)

Less 7.5% of Adjusted gross income ($2,400)  

($32,000×7.5%)

Medical Expense Deduction  $75

($2,975 - $500 - $2,400)

Inconclusion assuming Reggie who is 55, had an adjusted gross income of $32,000 in 2020, Reggies medical expense deduction will be $75

Learn more here:

brainly.com/question/17136095

6 0
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Answer:

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