Discuss a prominent environmental or sustainability practice employed by a company that you believe has been forward thinking an
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Answer:
i. Discounted cashflow equations.
a. $180,000 at the end of five years.
This is a lump sum present value/ discounted cashflow which can be calculated as;
Formula = 180,000 / ( 1 + r)^n
= 180,000/ ( 1 + 12%)^5
= $102,136.83
b. $11,400 a year forever
This is a perpetuity. The present value/ discounted cashflow of a perpetuity is calculated as;
Formula = Amount/rate
= 11,400/12%
= $95,000
c. $19,000 for each of 10 years.
This is an annuity. The formula for calculating the Present value/ discounted cashflow of an annuity is;
where <em>i </em>is interest rate and <em>n</em> is number of periods
= $107,354.24
d. $6,500 next year and increasing thereafter by 5% a year forever.
This is a growing perpetuity. The present value/ discounted cashflow formula is;
= Amount / ( discount rate - growth rate)
= 6,500 / ( 12% - 5%)
= $92,857.14
ii. Choose <u>$19,000 for each of 10 years</u> as it has the highest present value.
Answer:
AOLC_{Allan}=$2750
AOLC_{Kara}=$2475
AOLC_{Allan}=$1000
AOLC_{Kara}=$780
Explanation:
American Opportunity Learning credit.
First, assuming Allan and Kara are eligible, we must know how the two forms of credit work. For the American Opportunity Learning credit (AOLC), it is possible to receive 100% of the tax deduction for the first 2000 and then 25% of the deduction up to a maximum of 2500. So, the amount of the opportunity credit for Allan and Kara is given by:
Now, for the American Lifetime Learning credit (ALLC), we have to allow 20% deduction of taxes up to $2000 if the person meets the requirement of not earning more than 68000, then: