Complete the two annual after-tax rates of return columns

Assignment Help Taxation

Reference no: EM13905653

Alan inherited $100,000 with the stipulation that he "invest it to financially benefit his family." Alan and Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son, Cooper's, education.

	Vacation Home	Cooper's Education
Initial investment	$50,000	$50,000
Investment horizon	5 years	18 years

Alan and Alice have a marginal income tax rate of 30 percent (capital gains rate of 15 percent) and have decided to investigate the following investment opportunities.

	Annual After-Tax		Annual After-Tax
5 Years	Rate of Return	18 Years	Rate of Return

Corporate bonds (ordinary 5.75%-4.75% interest taxed annually)

Dividend-paying stock (no 3.50%-3.50% appreciation and dividends are taxed at 15%)

Growth stock is $65,000, Future value is $140,000, Future value, Municipal bond (tax-exempt) 3.20%-3.10%

Complete the two annual after-tax rates of return columns for each investment and provide investment recommendations for Alan and Alice.

Reference no: EM13905653

Questions Cloud

Accepts all major bank credit cards : Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 3% charge on sales for using its card. On June 28, Jervis had $3,500 in NB Card credit sales. What entry should Jervis make on June 28 to recor..

What is the total change in length : At 6 degrees Celsius a metal rod is 1.5 m total length with half the length steel and the other half brass. The rod is heated to 150 degrees Celsius. What is the total change in length?

Favorable variance-how many units were actually produced : The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor rate variance is. A favorable variance. The standard quantity allowed for the units produced ..

What are the risks with the given strategy : Duff is contemplating using this "strategy" of not reporting cash collected in his business to minimize his tax liability. Is this tax planning? What are the risks with this strategy?

Complete the two annual after-tax rates of return columns : Complete the two annual after-tax rates of return columns for each investment and provide investment recommendations for Alan and Alice.

Development team modify : The application used to calculate the cost of carrying additional luggage results in erroneous amount, if the weight of the luggage is a fractional number. Help the development team modify the code snippet so that the cost of carrying additional l..

Compute cost of ending inventory and cost of goods : Lisa Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Lisa had 85 units in ending inventory. Compute the cost of the ending inventory and the ..

Draw a high-level dfd of the computerized inventory system : Draw a Context Diagram of the Computerised Inventory System at The Variety Store from the perspective of the Purchasing Department.

Baker is a retailer that uses a perpetual inventory system : Refer to Exercise 5-4 and prepare the appropriate journal entries for Baker Co. to record the May 5 purchase and each of the three separate transactions a through c.

User Account

All Pages