Incremental income tax rate

Assignment Help Business Economics
Reference no: EM131810381

A house and lot are for sale for $155,000. It is estimated that $45,000 is the land's value and $110,000 is the value of the house. The net rental income would be $12,000 per year after taking all expenses, except depreciation, into account. The house would be depreciated by straight-line depreciation using a 27.5-year depreciable life and zero salvage value. Mary Silva, the prospective purchaser, wants a 10% after-tax rate of return on her investment after considering both annual income taxes and a capital gain when she sells the house and lot. At what price would she have to sell the house at the end of 10 years to achieve her objective? You may assume that Mary has an incremental income tax rate of 28% in each of the 10 years.

Reference no: EM131810381

Questions Cloud

Discuss what is the maximum income tax rate : What is the maximum income tax rate that applies to the employee salary, the employment tax rate
Purchasing the electronic testing device : What minimum equal annual benefit must Able obtain before taxes in each of the 5 years to justify purchasing the electronic testing device?
What is the net st or lt gains and losses : What is the net ST or LT gains and losses for 2007? What is the appropriate tax treatment of the net gain or loss.
What is the firm cost of equity : The stock price after the announcement settled at $16 a share. What is the firm's cost of equity
Incremental income tax rate : You may assume that Mary has an incremental income tax rate of 28% in each of the 10 years.
Explain the accounting valuations for the post control step : Do you agree or disagree with the GAAP treatment of reporting additional investments in subsidiaries when control has previously been established?
Problem-raindrops are falling at an average rate : Raindrops are falling at an average rate of 30 drops per square inch per minute.
How much can it afford to pay for the computer : If the firm wants a 15% rate of return, after considering both state and federal income taxes, how much can it afford to pay for the computer?
How much gain is recognized by walter on the sale of house : How much gain is recognized by Walter on the sale of the house? What is the basis of the new house purchased by Walter?

Reviews

Write a Review

Business Economics Questions & Answers

  How to get output of seq ss in spss

How to get o/p of SEQ SS in SPSS. When we want to know sequential value which accumulate R square.

  Null and alternative hypotheses

In a sample of 100 people who have had strokes, the average cholesterol level was 250 with a standard deviation of 40. In order to test the hypothesis (at the 5% level of significance) that the average cholesterol level of people who have had stro..

  Sell donuts at our respective two businesses

If you and I sell donuts at our respective two businesses, Dunky Doos and Kreamy Krisps, as two competitors, can we agree to set a base price on the donuts (no donut will sell for less than 39 cents)? Why or why not?

  What is the weighted mean price per share

In November, she purchased an additional 550 shares, but the stock declined to $29 per share. What is the weighted mean price per share?

  Q1 total fixed cost or sunk cost is independent of quantity

q1. total fixed cost or sunk cost is independent of quantity produced.assume a small firm has invested 10 million in

  Consumer and investor optimism and pessimism

Consumer and investor optimism and pessimism matter a great deal in the economy. Suppose that survey measures of consumer confidence indicate a wave of pessimism is sweeping the country.

  What will happen to the unemployment rate

Suppose that in a particular month roughly 8 million people in the United States were seeking jobs but had not found them. Suppose that 2 million of these people give up their searches in the following month and stopped looking for work. What will ha..

  Experience immiserizing growth

Consider a small nation producing both computers (y-axis) and coffee (x-axis) and facing increasing opportunity costs. Starting from a free trade equilibrium where this nation exports coffee and imports computers, can this nation experience “immiseri..

  Financialization of the capitalist political economy

How the "financialization" of the capitalist political economy was central to the global economic crisis of 2008. (Explain what financialization is; how or why it arose as a resolution to earlier crises; and what specific features of it were importan..

  Rapid rates of economic growth are not desirable

More people in high-income countries than in low-income countries tend to believe that rapid rates of economic growth are not desirable. Which of the following best explains what is actually happening to real per capita GDPs of countries?

  Under the pure signaling model

Under the pure signaling model, the social benefit associated with education is

  Describe the effects of employment discrimination on wages

1. Describe the effects of employment discrimination on wages. 2. How could this impact your business' decisions in relation to labor costs?

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