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Korolek [52]
2 years ago
13

Tom takes a loan of $60,000 at 4% annual interest to purchase a property worth $100,000. He earns an annual income of $10,000 af

ter expenses but before interest and income taxes are deducted. If the income tax rate is 30%, calculate Tom's leveraged return on the real estate investment
Business
1 answer:
guajiro [1.7K]2 years ago
8 0

Based on the given data, Tom's leveraged return on the real estate investment is 13.3%.

A leveraged return means an investment return on equity partially financed with debt.

Investment in property = $100,000 - $60,000

Investment in property = $40,000

Interest = $60,000 * 4%

Interest = $2,400

Net income after tax = ($10,000 - $2,400) * (1 - 30%)

Net income after tax = $7,600 * 0.70

Net income after tax = $5,320

Leveraged return = Net income after tax / Investment in property * 100

Leveraged return = $5,320 / $40,000 * 100

Leveraged return = 0.133 * 100

Leveraged return = 13.3%

Hence, Tom's leveraged return on the real estate investment is 13.3%.

Learn more about leveraged return:

<em>brainly.com/question/14005616</em>

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The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its ass
Anvisha [2.4K]

Answer:

1. The cost of a hard drive installed in a computer. DIRECT MATERIAL COST.

The business of the company is to make computers so when it comes to hard drives, these are fundamental parts of a computer so they will be classified as direct materials since they are directly involved in the production process.

2. The cost of advertising in the Puget Sound Computer User newspaper. SELLING COST.

Advertising is done to be able to sell gods and services so it will fall under selling costs.

3. The wages of employees who assemble computers from components. DIRECT LABOR COST.

The labor cost of those that are involved in the direct manufacture of the computer will be considered direct labor as they are directly involved in the production process.

4. Sales commissions paid to the company’s salespeople. SELLING COST.

Sales commissions are paid to encourage the salespeople to sell more so this is a selling cost as it is incurred to increase sales.

5 0
3 years ago
Each individual must make choices because A. wants are sometimes mixed up with needs. B. resources are limited and therefore can
77julia77 [94]

Answer:

The correct answer is letter "B": resources are limited and therefore cannot satisfy​ one's many competing wants.

Explanation:

Scarcity is the main problem in economic by which people have unlimited needs but finite resources to satisfy them. As a result, individuals must make tradeoffs to sacrifice part of the satisfaction of a need, to satisfy part of another need. Scarcity pushes people to make rational decisions to maximize their returns.

7 0
3 years ago
North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. Accou
Nikolay [14]

Answer:

North Star

Adjusting Journal Entries:

December 31:

Rent Expense      $1,280

Prepaid Rent                      $1,280

To accrue rent for the period.

Depreciation Expense $1,080

Accumulated Depreciation           $1,080

To accrue Depreciation charge for the year.

Utilities Expense $9,800

Utilities Payable            $9,800

To accrue unpaid utilities.

Income Tax Expense $470

Income Tax Payable         $470

To accrue income tax liability.

Explanation:

Adjusting entries are journal entries that are made at the end of an accounting period to ensure that all expenses and incomes pertaining to the period are recognized in accordance with the accrual concept and the matching principle.  These accounting concepts require that all expenses incurred whether paid for or not and income whether received or not, which relate to the period, are matched respectively.

7 0
3 years ago
What is the var of a 10 million portfolio with normally distributed returns at the 5% VaR? Assume the expected return is 13% and
Kitty [74]

Answer and Explanation:

The computation is shown below:

1. VaR = Expected return - z × Standard deviation  

= 13% - 1.645 × 20%

= -19.90%

Therefore the option a is the correct answer.

2) Now the correlation coefficient is

Variance of the portfolio  = (weight of A × Standard deviation 1)^2 + (weight of B × Standard deviation 2)^2 + (2 × weight of A × weight of B × Standard deviation 1 × Standard deviation 2 × correlation 1 and 2)

3.80% = (60% × 24%)^2 + (40% × 18%)^2 + (2 × 60% × 40% × 24% × 18% × correlation 1 and 2)

So the correlation is 0.583

8 0
3 years ago
The __________ phase of the strategic marketing process usually results in a __________ that sets the direction for the marketin
Paraphin [41]

Answer:

C. planning; marketing plan

Explanation:

A marketing process is the establishment of goals for a marketing campaign. <em>During the planning phase, you'll need to set your target customers and how to approach them, this will lead to specific and measurable goals to direct your next actions.</em>

I hope you find this information useful and interesting! Good luck!

7 0
3 years ago
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