Answer:
Amortization table
Opening liability Installments Interest Principal payment Closing liability
139,108 18000 1211 16788.92498 122,319
122,319 18000 1043 16956.81423 105,362
105,362 18000 873 17126.38238 88,235
88,235 18000 702 17297.6462 70,938
70,938 18000 529 17470.62266 53,467
53,467 18000 354 17645.32889 35,822
35,822 18000 178 17821.78218 18,000
18,000 18000 0 0 0
Answer:
Increase in tax rate will reduce income form bond but will not affect the benefits derivable from the purchase of the new luxury auto.
Explanation:
First, a look at the after tax rates for when tax is 35% and when it is increased to 50%.
Step 1: Compute the after tax rate when tax is 35%
=Interest rate x (1-tax rate)
= 0.08 x (1- 0.35)
-5.2%
Step 2: Compute the after tax rate when tax is increased to 50%
= Interest rate x (1- tax rate)
= 0.08 x (1-0.5)
=4%
The first outcome is that an increase in tax rate leads to a decrease in income. Meaning an increased tax rate reduces the income from the bonds.
However, an increase in tax rate although it will affect the income will have no effect on the new luxury condo, that Ms V wants to buy. This is because, the benefits Ms V will get from the auto cannot be taxed as compared with the interest on the bond.
Hence, it becomes easier for Ms V to buy the luxury auto than invest in bonds if the tax rate should increase
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Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Your goal is to have $15,000 in your bank account by the end of four years. The interest rate remains constant at 4% and you want to make annual identical deposits.
<u>End of the year:</u>
To calculate the annual deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (15,000*0.04) / [(1.04^4) - 1]= $3,532.35
<u>Beginning of the year:</u>
A= {(FV*i)/ {[(1+i)^n] - 1]} / (1+i)
A= 3,532.35/ 1.04= $3,396.49
The difference resides in the interest compounded. At the beginning of the year the interest compound for one more period.
Answer:
$180 billion
Explanation:
The consumption is an act of spending the money from an income. The marginal propensity to consume is the proportion increase in the amount that a consumer is spending. The savings then decline if the consumption increases. In the given scenario the consumption will not raise even if there is an increase in national income and taxes are kept fixed at previous level. This is because marginal propensity to consume is same.
