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tigry1 [53]
3 years ago
10

Hugh has the choice between investing in a City of Heflin bond at 6 percent or investing in a Surething bond at 9 percent. Assum

ing that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Inc., need to offer to make Hugh indifferent between investing in the two bonds?
Business
1 answer:
Nata [24]3 years ago
6 0

Answer:

Rate of interest = 6/60% = 10%

Explanation:

Net rate of bonds after tax will be = Rate of interest X (1 - Tax)

Heflin bond = 6% X (1 - 40%) = 3.6%

Surething Bond = 9% X (1 - 40%) = 5.4%

Since both bonds provide interest and Surething provides more than Heflin

then in order to make both incomparable Surething can decrease the rate of interest to that of Heflin so that Hugh remains indifferent will be 6%

In case there is no tax on Heflin Bond, as Hugh is in 40% marginal tax bracket, then net interest = 6 %

But for Surething Hugh will have to pay tax then after tax value of interest shall be 6% i.e. 6% = 1 - 40%

Rate of interest = 6/60% = 10%

Surething needs to pay Interest @10% on bonds. to make Hugh indifferent of both the bonds.

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The significant event at the conclusion of each phase is called a milestone.

  • A milestone in your life is an important occasion. A turning point frequently ushers in a fresh chapter. For instance, your high school graduation was a significant event in your life. A roadside signpost that indicates the distance to a specific point is referred to as a milestone.
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2 years ago
Sunny Corporation began the year with cash of $ 142 comma 000 and land that cost $ 47 comma 000. During the year Sunny earned se
Dmitry [639]

Answer:

How much net income​ (or net​ loss) did Sunny experience for the​ year?

Net loss 6000

Explanation:

Cash 142.000

Land 47.000

 

Revenue    285.000

Salaries          185.000

Rent            81.000

Utilities            25.000

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6 0
3 years ago
How much would you need to deposit in an account now, such that in 5 years your account will have increased to $8,000, assuming
VladimirAG [237]

Answer:

$6268.21

Explanation:

Future value = $8000

Interest(r) = 5%

Period (n)= 5 years

How much need to deposit?

Find the Present value:

PV = FV / (1+r)n

= 8000 / (1.05)5

= 8000 / 1.27628156

Present Value / Amount need to deposi today = $6268.21 approx

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It is an accounting record between income and expenses, used to keep track of identifiable and cost-specific inventory items.

This method gives managers or members of an entity a greater possibility of manipulating profits by identifying units in ending inventory as coming from specific purchases.

Therefore, we can conclude that the specific identification method is to track the cost of each item or category of products in the inventory.

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2 years ago
The invention of the _____ is what distinguished modern restaurants from predecessor food service operations.
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The invention of restaurant foods is what distinguished modern restaurants from predecessor food service operations.

<h3>What is meant by food service operations?</h3>

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