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vesna_86 [32]
3 years ago
12

Anne's marginal income tax rate of 32 percent. She purchases a corporate bond for 10,000 and the maturity, or face value of the

bond is 10000. If the bond pays 5 percent before taxes, what is annie's after tax rate of return from the bond if the bond matures in one year? What is her annual after tax rate of return if the bond matures in 10 years?
Business
1 answer:
Yuliya22 [10]3 years ago
4 0

Answer:

The return from the bond is 5% per year before tax. And the tax is 32%.

After tax rate of return = Interest rate * (1-tax rate)

= 5% * (1-32%)

= 0.05 * 0.68

= 0.034

= 3.4%

Thus, the after tax of return from the bond is 3.4%

The interest of the taxable income corporate bond is taxed annually. Hence, the change in the investment maturity period would not affect the after tax rate of return from bond. The annual after tax rate of bond would not change irrespective of the investment maturity period. The after tax rate of return of corporate bonds would be the same 3.4% even in the case of 10 years maturity period.

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7 0
2 years ago
1.9 Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,000 tires per day with the fol
KIM [24]
Base on the question which ask to compute the following ask in the following question and in my further computation, the answer would be the following.
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4 0
3 years ago
Flagg records adjusting entries at its December 31 year end. At December 31, employees had earned $8,800 of unpaid and unrecorde
Zepler [3.9K]

Answer:

Debt Salaries payable is $8800

Credit Salaries expense is $8800

Explanation:

given data

earn unpaid and unrecorded salaries = $8,800

paid = $22,000

to find out

journal entry to reverse the effect

solution

here journal entry to reverse the effect January 1 journal entry to reverse the effect of the December 31 salary expense accrual is as

particular                                  debt                               credit

Salaries payable                      $8800

Salaries expense                                                           $8800

as here unpaid salaries of December is paid in January

7 0
3 years ago
Gasoline and bicycles are complements in consumption. Suppose we increase the federal gasoline tax to $1 per gallon. What are th
dalvyx [7]

Answer: A

Explanation:

A complementary good is a product that is used together with another product. Without its complement, such a good will have little value. When there is increase in the price of a particular product, the demand of its complement reduces because consumers may not be able to use the complement on its own.

Complements have negative cross elasticity of demand i.e there is increase in the demand for a product when the price of its complement reduces. If bicycles and gasoline are complements, an increase in tax on gasoline will have a negative effect on the demand for bicycle. Due to the price increase of gasoline, less people will demand for bicycle. The initial change that will occur as a result of this is that as there is a price increase for gasoline, there will be a leftward shift in the demand for bicycle. This implies that less bicycle will be demanded for.

7 0
4 years ago
Assume the economy has a 12 percent chance of booming, a 4 percent chance of being recessionary, and being normal the remainder
elena-s [515]

Answer :

13.86%

Explanation:

Calculation of the Expected rate of return

First step

Expected return = (.12 x.187) + (.84 x.144) + [.04 x(-.12)]

Second step

Expected return =(0.02244)+(0.12096)+ (-0.0048)

Expected return=0.1386 ×100

Expected return=13.86%

Therefore the Expected return would be 13.86%

6 0
4 years ago
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