How much must the land increase in value to yield

Assignment Help Accounting Basics
Reference no: EM133073503

Question - Harper is considering three alternative investments of $10,000. Assume that the taxpayer is in the 24% tax bracket for ordinary income and 15% for qualifying capital gains in all tax years. The selected investment will be liquidated at the end of five years. The alternatives are:

A taxable corporate bond yielding 5.333% before tax and the interest can be reinvested at 5.333% before tax.

A series EE bond that will have a maturity value of $12,200 (a 4% before-tax rate of return).

Land that will increase in value.

The gain on the land is classified and taxed as a long-term capital gain. The income from the bonds is taxed ordinary income. How much must the land increase in value to yield a greater after-tax return than either of the bonds?

Reference no: EM133073503

Questions Cloud

Discuss quantitative easing as a monetary policy tool : Discuss quantitative easing as a monetary policy tool with reference to Canada. How does this affect money supply
Calculate the payback period-return on capital employed : LJH plc is planning to buy a machine which will cost £900,000 and which is expected to generate new cash sales of £600,000 per year. The expected useful life of
What be the total dollar return on stock investment : 1. What would be the value of your stock investments in 13 years if you invest $2,400 in stocks at the beginning of every year starting today?
What was the selling price of the product : Gregory imported a product and marked it up by 45% of the cost. The amount of markup was $625. What was the selling price of the product
How much must the land increase in value to yield : The income from the bonds is taxed ordinary income. How much must the land increase in value to yield a greater after-tax return than either of the bonds
What is the rate of return in account : Suppose you enter into a short position in 6-month futures contract on 100 ounces of gold at a futures price of $1,854 per ounce.
What is the expected return of the stock : Given a risk-free rate of 4.5%, a market return of 11.4%, and a beta of 1.7, what is the expected return of the stock? Enter your answer as a percentage.
What was the yield to maturity of the bonds : HP financed 60% of this purchase with a 1-year renewable bank loan at a 3.5% interest. What was the yield to maturity of the bonds
How much is the net income under the absorption costing : Dilawan Company produced 8,000 units in 200C and sold 6,000 units at P 30 per unit. How much is the net income under the absorption costing

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd