1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ValentinkaMS [17]
3 years ago
12

Ramon incurred $83,100 of interest expense related to his investments this year. His investment income included $34,500 of inter

est and a $37,500 net capital gain on the sale of securities. Ramon has asked you to compute the amount of his deduction for investment interest, taking into consideration any options he might have. What is the maximum amount of Ramon’s investment interest expense deduction in the current year?
Business
1 answer:
cestrela7 [59]3 years ago
7 0

Answer:

$72,000

Explanation:

To calculate investment interest expense dedcution, we need to know the total investment income  & total investment interest expenses

Then there're 2 scenarios as followings:

  • If the investment interest expenses are less than the net investment income, the entire investment interest expense is deductible.
  • If the investment interest expenses are more than the net investment income, we can deduct the expenses up to the net investment income amount. The rest of the expenses are carried forward to next year.

In this example, Ramon's investment income is  $72,000 ($34,500 of interest and a $37,500 net capital gain on the sale of securities); is lower than his interest expenses of $83,100.

So Ramon is entiled to deduct $72,000 all the entire investment interest expense in current year

You might be interested in
Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However
suter [353]

Answer:

The stock will trade for 4.30 dollars in the market

Explanation:

The stock will be valued at the discounted value of their future cash flow.

w calculate the cas flow by multiplying by the grow rate given.

Then we discount using the present value of a lump sum:

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  $0.5000  

time   3.00  

rate  0.18

\frac{0.5}{(1 + 0.18)^{3} } = PV  

PV   0.30  

Then, for the entire of the dividend after year 6th we use the gordon model:

dividends / (rate - grow) and then we discount that

\frac{dividends}{return - growh}

Y# Cashflow Discounted

0 0          

1 0        

2 0          

3 0.5                 0.304315436

4 0.825         0.425525822

5 1.36125          0.595014921

6 1.4565375 2.971555503

Total 4.296411682

8 0
3 years ago
Assume that you are an intern with the Brayton Company, and you have collected the following data: The yield on the company's ou
Elis [28]

Answer:

8.038%

Explanation:

For the computation of the firm's WACC first we need to find out the cost of equity which is shown below:-

Cost of equity = Expected dividend ÷ (Price of the stock × (1 - Flotation cost)) + Growth rate

= $0.65 ÷ ($15.00 × (1 - 10%)) + 6.00%

= 10.81%

Now

WACC = Weight debt × (Cost of debt) × (1 - Tax rate) + Weight of equity × Cost of equity

= 45% × 7.75% × (1 - 40%) + 55% × 10.81%

= 8.038%

5 0
3 years ago
Rose has a $20,000 basis in the 60% of the Parent Corporation stock that she owns. Parent Corporation owns a 70% interest in Chi
Degger [83]

Answer:

The answer is: Rose will be taxed as receiving a $15,000 dividend distribution.

Explanation:

Since Parent Corporation owns 70% of Child Corporation, for tax purposes they are considered as one single firm. Rose is the main stockholder of Parent Co. so for tax purposes she is also a stockholder in Child Co. When Child Co. gives her $15,000 in exchange for Parent Co. stock, this would be considered as a dividend distribution rather a stock sale.

7 0
3 years ago
Which step minimizes project risks?
Semmy [17]

the answer i prefer is either A OR E ...cause without identifying the costs of a business u can't really run a bs successfully

6 0
2 years ago
Read 2 more answers
Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of
EastWind [94]

Answer:

d. both countries, as whole, will be better off.

Explanation:

When countries leverage on their comparative advantages, they will be better off. In this instance as US has comparative advantage in producing airplanes, it will be more cost effective for them to produce and export to Japan.

So also Japan will find it cheaper to produce televisions and export to the US. Both contries reduce cost by producing goods they have comparative advantage in.

6 0
3 years ago
Other questions:
  • Ground-fault circuit interrupters must be used for all of the following except?
    11·1 answer
  • On August 31, 2021, the general ledger of The Dean Acting Academy shows a balance for cash of $7,874. Cash receipts yet to be de
    7·1 answer
  • The sahara company purchased equipment on january 1, 2015, for $100,000. the equipment had an estimated residual value of $10,00
    9·1 answer
  • suppose your total taxable income this year is $75 000 you are taxed at a rate of 10 percent on the first 25000 20 percent on th
    9·1 answer
  • An instance where sellers should work to keep relationships with consumers is when they feel that the product
    12·1 answer
  • Unrestricted current funds of a private university designated by the governing board for a specific future purpose should be rep
    6·1 answer
  • Hey, who is enjoying the new Minec,raft Cav,es and Cli,ffs update?
    13·1 answer
  • Which examples demonstrate common qualifications for Security and Protective Services careers? Check all that apply.
    12·2 answers
  • PLEASE QUICK (will give Brainliest)
    10·2 answers
  • VideoPlus, Inc. manufactures two types of DVD players, a deluxe model and a standard model. The deluxe model is a multi-format p
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!