Answer:
Don Juan is sole business owner and his loss in excess to the minimum threshold amount is $250,000. So Don Juan may deduct the amount $350,000 in terms of loss.
If Don Juan does not deduct the loss this year, it would be carried forward to next fiscal statement
Explanation:
Part 1. The calculation is made as below
Excess of business loss ($600,000) – (other business income + Threshold amount ($250,000))
The minimum threshold amount is deductible from the Tax comes out to be $350,000
Part 2. The loss is reflected in next year’s tax statement as net operating loss and can be carried forward. So if Don Juan miss the loss deduction claim, he can do it next year.
Answer:
1) The yield to maturity is required rate of return on a bond expressed as a nominal annual interest rate. For noncallable bonds, the yield to maturity and required rate of returns are interchangeable terms
2) Unlike YTM and required return, the coupon rate used as the interest rate in bond cash flow valuation, but is fixed percentage of par over the life of the bond used to set the coupon payment amount.
3) The coupon rate is constant at 10%. The YTM is 8%.
Explanation:
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Answer:
WACC (CAPM) 5.2%
WACC (ICAPM) 5.03%
Explanation:
The weighted average cost of capital is
Ke * E/ E+D + Kd * (1 -t) D / E+D
Ke = Rf + (Rm - Rf) * 
Ke (CAPM) = 3.50% + (8% - 3.50%) * 1.12
Ke (CAPM) = 7.532%
Kd (CAPM) = Kd (1-t)
Kd (CAPM) = 7.60 (1-39%)
Kd (CAPM) = 4.636%
WACC (ICAPM) : 7.532 * 20% + 4.636 * 80%
WACC (CAPM) = 5.2164%
Ke (ICAPM) = 3.50% + (8% - 3.50%) * 0.86
Ke (ICAPM) = 6.596%
Kd (ICAPM) = Kd (1-t)
Kd (ICAPM) = 7.60 (1-39%)
Kd (ICAPM) = 4.636%
WACC (ICAPM) : 6.596 * 20% + 4.636 * 80%
WACC (CAPM) = 5.03%