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The 6-month CDs consist of two $50,000 certificates, both of which yield 4% interest. One CD matures on January 3, 2013. Nick’s banker tells him that he can renew the CD for one year at 4%. Nick’s stockbroker tells him that he can purchase tax-exempt bonds with a yield of 3%. Nick would like you to determine whether the tax-exempt bonds provide him a better after-tax return than the CD. CD’s [2*(50,000*.04)] 4,000 Taxable Taxable Bond [2*(50,000*.03)] 3,000 Non-Taxable The Tax-Exempt (Non-Taxable) bonds would provide him a better after-tax return than the CD’s.
PART C: Jolene is concerned that they are not getting the best return on their Corb Company stock. When they purchased the stock in 2002, the $.75 per share dividend was yielding 10% before taxes. However, the rise in market value has far outpaced the dividend growth, and it is yielding only 3.75%, based on the current market value. Jolene thinks they should sell the stock and purchase either the 3% tax-exempt securities or the 4% CD if it would be a better deal from an income tax viewpoint. Calculate the tax effect on their 2013 income of selling the shares, and determine whether they should sell the shares and invest the after-tax proceeds in tax-exempt securities or the 4% CD. Do this calculation after you have determined the best option regarding the CD that matures in January.
The comparative statements of Osborne Company are presented here. OSBORNE COMPANY Income Statements For the Years Ended December 31 2014 2013 Net sales $1,895,647 $1,755,607 Cost of goods sold 1,063,647 1,011,107 Gross profit 832,000 744,500 Selling ..
How does the system work now, present day process of check clearing in Federal Reserve
The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,400 direct labor-hours will be required in August. The variable overhead rate is $8.80 per direct labor-hour...
Zink Company manufactures a high-tech component that passes through two production processing departments, Molding and Assembly.
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Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second m..
Grant Film Productions wants to expand and has borrowed $100,000. As a condition for making this loan, the bank requires that the store maintain a current ratio of at least 1.50. Business has been good but not great. Indicate how recording this reven..
If Telconnect has applied the partial equity method, what Entry *C is needed for a 2011 consolidation. What noncontrolling interest balance will appear in consolidated financial statements for 2011?
A quick ratio that is about equal to the current ratio indicates that
Chao Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Chao's accountant prepared the following data about ending receivables:
All of the following are examples of procedures a firm can use to monitor its system of quality control except
Assume you just retired and you have accumulated $900,000 in your retirement account. You opted to receive annual payment of $60,000 for the next 30 years. Determine the interest rate on this annuity.
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