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dedylja [7]
3 years ago
8

Ben has ​$2 comma 000 in his savings account and the bank pays an interest rate of 14 percent a year. The inflation rate is 9 pe

rcent a year. The government taxes the interest that Ben earns on his deposit at 10 percent. Calculate the nominal​ after-tax interest rate and the real​ after-tax interest rate that Ben earns.    ​>>> Answer to 1 decimal place. ​>>> If your answer is​ negative, include a minus sign. If your answer is​ positive, do not include a plus sign. The nominal​ after-tax interest rate is nothing percent a year.
Business
1 answer:
Alinara [238K]3 years ago
5 0

Answer: After Tax Nominal Rate - 12.6%

After Tax Real Rate - 3.6%

Explanation:

<em>Real Rate of return is defined as the nominal interest rate less inflation. </em>

The After Tax Real Rate therefore caters for tax from the Nominal rate and then deducts Inflation.

The formula is,

= Nominal Rate( 1 - tax rate) - Inflation rate

= 14% ( 1 - 10% ) - 9%

= 14 ( 90% ) - 9

= 3.6%

The <em>Nominal Rate is simply the Real Rate plus Inflation</em>. The After tax real rate has already being found so the After Tax Nominal Rate is,

= 3.6 + 9

= 12.6%

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The corporate charter of Imp Company authorized the issuance of 10 million, $1 par common shares. During 2021, its first year of
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Paid -in Excess capital as on December 31, 2021 $124 million

Explanation:

The computation of the amount reported as a additional paid-in capital  is shown below

For Jan 1, 8 million ×  $15              $120 million

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7 0
3 years ago
Cardboard is an example of which type of economic resource?​
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<h3><u>Answer</u>;</h3>

A capital resource

<h3><u>Explanation</u>;</h3>
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3 0
3 years ago
Frasier Cabinets wants to maintain a growth rate of 5 percent without incurring any additional equity financing. The firm mainta
KATRIN_1 [288]

Answer:

Option E is correct. Pay out ratio is 73.74 %

Explanation:

Payout ratio shows how much portion of the net earning the company pay to its shareholders in form of cash dividend. Higher pay out ratio implies that company pay large portion of its earning to shareholder.

Mathematically, pay out ratio is = 1 - Retention Ratio ------ (a)

Retention ration shows portion of the earning that the company has retained for future investment or operation or growth.

Given data

Growth rate = 5 % or 0.05

Debt to equity ratio = 0.55

Assets turn over = 1.30

Profit Margin = 9 % or 0.09

Retention ration can be calculated from sustainable growth ratio formula.

Sustainable growth rate = Retention ratio x Return on equity

Sustainable growth rate means the growth rate that the company wants to maintain in future.

Retention ratio = Sustainable growth rate / Return on equity ---- (b)

Return on equity is not given the question but it can be calculated from Du Pont equation.

According to Du Pont equation,

Return on Equity = Profit Margin x Assets Turn Over x Financial leverage

Return on Equity = 0.09 x 1.30 x ( 1 + 0.55) = 0.18135

Let r be retention ratio, Then

Sustainable growth rate = (0.18135 x r)/ ( 1- (0.18135 x r))

0.05 = (0.18135 x r)/ ( 1- (0.18135 x r))

r = 0.2626 = Retention ratio

Putting the value of retention ratio in equation (a)

Payout ratio = 1 - Retention ratio = 1 - 0.2626 = 0.7374 or 73.74 %.

 

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