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Vern owned farm acreage he inherited several years ago. There was no building nor improvement to the land. He decided to sell the farm in an exchange and acquired two rental houses. The Fixer House and The Money-Pit House closed escrows on separate occasions, but both were within the requirements of the 1031 exchange: The Big Easy Farm: Inherited Basis $451,739 Mortgage 0 Sale Price 769,633 Closing Costs 26,754 The Fixer House: Purchase Price $668,050 Mortgage 401,615 Closing Costs 11,744 Cash from Accommodator 278,179 The Money-Pit House: Purchase Price $740,200 Mortgage 289,829 Closing Costs 14,329 Cash from Accommodator 464,700
Required: 1. How much gain is taxable, if any?
2. What is the basis for the exchanged properties combined as a whole?
3. What are the allocated basis for The Fixer House and The Money-Pit House?
Start Up Plc is expected to pay a dividend of 4.75 per share at the end of year 1 and these dividends are expected to grow at a constant rate of 3.5% per year forever. If the required rate of return on the stock (and all stocks of the same risk class..
Calvin sells stock several years after he received it as a distribution from a qualified stock bonus plan. When the stock was distributed, he has a new unrealized appreciation of $7,500. Calvin also had ordinary income from the distribution of $29,00..
The left hand side of the balance sheet represents all assets the firm has and the right hand side :
Truson Company paid 4% SUTA a tax on taxable wages of $108,500. The taxable wages under FUTA were $89,400. What was the net FUTA tax of Truson Company?
Relate your answers to the movie ‘Inside Job’. What are the unintended consequences of financial innovation? What are the unintended consequences of regulation? Explain how the financial crisis of 2008 occurred—who is to blame?
Joe secured a loan of $12,000 five years ago from a bank for use toward his college expenses. The bank charges interest at the rate of 4%/year compounded monthly on his loan. Now that he has graduated from college, Joe wishes to repay the loan by amo..
A class-action suit against a utility company resulted in a settlement of $2.65 million for 79,000 customers. If the legal fees, which must be paid from the settlement, are $600,000, what amount will each plaintiff receive?
Compare and contrast the internal rate of return approach to the net present value approach to capital rationing. Which is better? Support your answer with well-reasoned arguments and examples.
An all equity firm generates cash flows (CFFA) of $100 million every year in perpetuity. Based on the risk of the cash flows, a discount rate of 20% is appropriate for the firm. The firm is considering a project that will require an investment of $75..
Three Guys Burgers, Inc., has offered $15.5 million for all of the common stock in Two Guys Fries, Corp. The current market capitalization of Two Guys as an independent company is $14.3 million. Assume the required return is 9 percent and the synergy..
(Relative valuation of common stock). Using P/E ratio approach to valuation calculate the value of a share of stock under the following conditions. The stock price using the P/E ratio valuation method is. The stock price using the dividends discount ..
List the Four Noble Truths. Explain how they illustrate the practical nature of Buddhist teaching?
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