If a reform of the tax laws encourages greater saving, the result would be

The country of Lessidinia has a tax system identical to that of the United States. Suppose someone in Lessidinia bought a parcel

kati45 [8]

Answer:

after tax real rate of capital gain = - 30%

so correct option is B. -30 percent

Explanation:

given data

bought land = 20,000 foci

price Index = 100

sold land = 100,000 foci

price index = 600

tax rate = 20 percent

to find out

Compute the taxes on the nominal gain and the change in the real value of the land and after-tax real rate of capital gain

solution

first we get here tax on nominal gains that is express as

tax on nominal gains = tax rate × gain

tax on nominal gains = 20% × ( 100,000 - 20,000 )

tax on nominal gains = 16000 foci

and

Real gain is here as

Real gain = sold land - price index ( bought land )

Real gain = $100,000 - 6 ( 20000)

Real gain = - $20000 foci

and

now after tax real rate of capital gain will be here as

after tax real rate of capital gain = (Real gain - tax on nominal gains ) ÷ ( sold land - real gain ) × 100

after tax real rate of capital gain = $\frac{-20000-16000}{120000}$ × 100

after tax real rate of capital gain = - 30%

so correct option is B. -30 percent

5 0

3 years ago

Holding all else constant, an increase in preferences by Mexicans for U.S. goods will ______ the demand for dollars in the forei

Finger [1]

Answer:

D. Increase; increase

Explanation:

Exchange rate is defined as the amount of one currency that can be exchanged for another currency at a particular time.

Demand and supply affects exchange rates of currencies.

Currencies that are in more demand tend to have higher exchange rates, while those with low demand will have low exchange rate.

In this instance an increase in preference for US goods will cause an increased demand for dollars. The dollar becomes stronger against the Peso.

It will take more pesos to purchase the dollar, so equillibrum exchange rate of peso to dollar will increase.

4 0

3 years ago

The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm

Tems11 [23]

Answer:

Part A)

Year 0 net cash flow would comprise of basic price, modification cost and requirement for net working capital. The formula for cash flow in Year 0 would be:

Year 0 Net Cash Flow = -Basic Price - Modification Cost - NWC

______________

Using the values provided in the question, we get,

Year 0 Net Cash Flow = -190,000 - 47,500 - 9,500 = -$247,000

______________________

Part B:

Year 1, 2 and 3 would required adjustment for depreciation charges (under MACRS) against expected savings. The depreciation rates for 3 year class asset would be 33%, 45% and 15% for Year 1, Year 2 and Year 3 respectively.

Depreciation would be calculated on the equipment's basic price and modification cost.

The formula that can be used to calculate the net operating cash flow would be:

Net Operating Cash Flow = (Sales - Depreciation)*(1-Tax Rate) + Depreciation

______________

Using the values provided in the question, we get, the table in the attached file

Important Information:

Depreciation (Year 1) = (190,000 + 47,500)*33% = $78,375

Depreciation (Year 2) = (190,000 + 47,500)*45% = $106,875

Depreciation (Year 3) = (190,000 + 47,500)*15% = $35,625

______________________

Part C:

Additional non operating cash flow would consist of after-tax salvage value and return of net working capital. Relevant formulas are:

Additional Non Operating Cash Flow = After Tax Salvage Value + Return of Net Working Capital

After Tax Salvage Value = Sales Value +/- Tax on Loss/Gain from Sale of Asset

Loss/Gain from Sale of Asset = Sales Value - Book Value

Book Value = (Basic Price + Modification Cost)*(1-(33%+45%+15%))

______________

Using the above mentioned formulas, we get,

Book Value = (190000 + 47500)*(1-(33%+45%+15%)) = $16,625

Gain on Sale of Equipment = 66,500 - 16,625 = $49,875

Tax on Gain = $49,875*30% = $14,962.50

After Tax Salvage Value = 66,500 - 14,962.50 = $51,537.50

_____________________

Additional (Non Operating) Cash Flow = $51,537.50 + $9,500 = $61,037.50 or $61,038

Explanation:

8 0

3 years ago

D

chubhunter [2.5K]

Answer:

False

Explanation:

The situation above is called the "pitch." This is a process of persuasion whereby people present their ideas to their potential clients or investors. This is done in order to achieve a particular purpose. In the situation above, the ad agency's purpose is to win the potential client's account. In order to become successful in pitching ideas, one has to consider some pointers such as getting to the point fast, using a message map, not using too many slides and the like.

So, this explains the answer.

5 0

3 years ago

During June, Vixen Fur Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expens

stepan [7]

Answer:

Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.

Explanation:

The journal entry is shown below:

Estimated Warranty Liability A/c Dr $14,000

To Merchandise Inventory $14,000

(Being the customer warranties is settled)

Since we have to settle the customer warranties, so we debited the estimated warranty liability account and credited the merchandise inventory account

Hence, all other options are wrong except last one

3 0

3 years ago