User Account

All Pages

Total tax ted pays on level annual payments

Assignment Help Financial Accounting
Reference no: EM133240478

Ted is an investor and has purchased an IIP for the original price of $873.27869470369.

Customers pay $873.27869470369 to buy an IIP. The IIP will pay out $37 at the end of each year for 11 years The IIP will pay out a further single payment of $1,000 after 11 years There are no further payments after this single payment at time 11.

1. Suppose Ted holds on to the IIP for the full 11 years. Ignoring time value of money, what is the profit he receives on an IIP? (This can be regarded as profit for tax purposes).

2. Ted's tax rate is 30%. The full amounts of the level annual payments from the IIP are taxable. What is the total tax Ted pays on the level annual payments?

3. If the final single payment exceeds the original price paid, the difference between the two is called a "capital gain" for tax purposes. Conversely, if the original price exceeds the final single payment, this is called a "capital loss".

For this investment, only 50% of the capital gain is taxable. Calculate the tax that Ted pays as a result of the single payment. Give your answer in dollars, to the nearest cent.

(Note: we have implicitly used the "CGT discount" rule in Australia for investments held for more than 12 months in this question)

Reference no: EM133240478

Questions Cloud

Explain your proposal recommendation : Explain your proposal recommendation in detail. Address how your budget proposal will perform against your identified budget issue.
What is mixed air : The AHU mixes outside air (OA) at -2 °F with the return air (RA) in winter. Assume that all three areas are kept at 68°F DB and 30%RH in winter.
Customer service standards for continuous improvement : How to monitor and evaluate your customer service standards for continuous improvement
Improve welfare of employee-investors : If employee-investors are unsophisticated and unlikely to be materially influenced by educational efforts, the best way to improve welfare of employee-investors
Total tax ted pays on level annual payments : Ted's tax rate is 30%. The full amounts of the level annual payments from the IIP are taxable. What is the total tax Ted pays on the level annual payments?
Pass the journal entry : Sanjay Co. issued 60000 shares @ 10 each and received all the money except the final call money of 2 each for 500 shares. Pass the journal entry.
What is dupont analysis : What is Dupont analysis? Explain the relevance of Dupont analysis.
Identify the assets that your company depreciates : Identify the assets that your company depreciates. What is the useful life of these assets? What depreciation method does your company use?
About the nature of non-profit organisation : List three assumptions about the nature of the non-profit organisation which will govern the plans you selected.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Compute the activity rate for each of activity cost pools

Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of cu..

  Determine charless available education tax credit

Charles has two college-age children, karl, a freshman at state university, and rose, a junior at northwest university. Both karl and rose are full time students. Karl’s expenses during the 2014 fall semester are as follows: $2,400 tuition, $250 book..

  Indicate whether each statement is true or false

Dividend distributions by a corporation to its shareholders are deductible to the corporation to the extent of its earnings and profits.

  Find the size of each quarterly deposit in the fund

Find the size of each (equal) quarterly deposit in the fund. Lowell Corporation wishes to establish a sinking fund to retire a $200,000 debt that is due.

  Describes how price adjustments eliminate a shortage

Describes how price adjustments eliminate a shortage? When a decrease in the price of good A causes an increase in demand for good B, the goods are

  Frederic chopin corporation is preparing its december 31

frederic chopin corporation is preparing its december 31 2008 balance sheet. the following items may be reported as

  Compute the conversion cost per equivalent unit

The production department had conversion costs in the beginning goods is process inventory of $94,000. Compute the conversion cost per equivalent unit

  What profit or loss would Security Brokers incur

Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. What profit or loss would Security Brokers incur

  What is estimated raw materials inventory balance at the end

Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: What is the estimated raw materials inventory balance at the end of July? What is the total estim..

  Evaluation of capital expenditure proposal

What recommendation would you make to the, management of Busy Beaver Corp. about evaluating capital expenditure proposals? Support your recommendation with the appropriate rationale.

  Discuss what are your reactions to the films violence

Do such depictions sensitize or desensitize one to violence, What are your reactions to the film's violence

  What price per bond suresafe be able to realize on the sale

It estimates that, in current market conditions, the bonds should provide a return of 14 percent.- What price per bond should Suresafe be able to realize on the sale?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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