Compare the present discounted value of taxes

Assignment Help Macroeconomics

Reference no: EM131442195

Question: Compare the present discounted value of taxes an individual who is the sole owner of a corporation that has $1 million in profits would pay under the following two scenarios:

(a) She pays out the profits to herself, invests them in a bond yielding 10 percent, which she holds for seven years.

(b) She retains the profits inside the corporation, invests in an asset yielding 10 percent; after seven years, she sells the asset (which has retained its original value), and distributes the proceeds to herself. (For simplicity, look at two cases, one in which the individual is in the 40 percent marginal tax bracket and pays a 20 percent capital gains tax rate; in the other the individual is in the 15 percent marginal tax bracket and pays a 10 percent capital gains tax rate.)

Reference no: EM131442195

Questions Cloud

Comparing the taxes an individual pay : Compare the taxes an individual would pay if he had a million dolla.4 to invest in a machine which lasts one period only, yielding a gross return of $1.2 million, if he incorporates and if he does not.

Identify the nutritional needs of the individual with diseas : Due to an increase in cardiovascular disease and cancer death in the United States, the Center for Disease Control and Prevention (CDC), the Food & Drug Administration (FDA), and the National Cancer Institute (NCI) have formed a joint task force a..

What specifically did the first person say : What specifically did the first person say? In what way did the other person understand it? What did the person really mean? Do you think that the misunderstanding was intentional?

How does geographic location relate to the level of quality : This paragraph piggybacks on the previous paragraph. Now that you have discussed the background, tell the reader what the general problem is and why you want to research it. Your general problem is a broad overview of the general problem. Oftenti..

Compare the present discounted value of taxes : Compare the present discounted value of taxes an individual who is the sole owner of a corporation that has $1 million in profits would pay under the following two scenarios.

How knowledge of sampling methodologies might improve : Internet communications and viral marketing techniques have resulted in a proliferation of surveys. Discuss how knowledge of sampling methodologies might improve the results of on-line surveys.

Describe the cause and symptoms of the disease : Write a 350- to 525-word blog entry on the disease. You are getting the word out to your chosen audience. Answer the following questions:Describe the cause and symptoms of the disease. Which populations are most susceptible to infection? How is..

Explain country risk analysis and needs assessment : Explain country risk analysis, needs assessment, global and local business opportunities for all stakeholders, and competitive analysis

Define tax brackets : A tax avoidance device that became popular in the late 1970s and early 1980s was the zero coupon bond. This was a bond that paid no interest.

User Account

All Pages