What is the after-tax return for the same investor

Assignment Help Accounting Basics
Reference no: EM133010316

Question - Suppose that at the start of the year, a no-load mutual fund has a net asset value of $27.15 per share. During the year, it pays its shareholders a capital gain and dividend distribution of $1.12 per share and finishes the year with an NAV of $30.34.

a. What is the return to an investor who holds 257.876 shares of this fund in his (nontaxable) retirement account?

b. What is the after-tax return for the same investor if these shares were held in an ordinary savings account? Assume that the investor is in the 30 percent tax bracket.

c. If the investment company allowed the investor to automatically reinvest his cash distribution in additional fund shares, how many additional shares could the investor acquire? Assume that the distribution occurred at year end and that the proceeds from the distribution can be reinvested at the year-end NAV.

Reference no: EM133010316

Questions Cloud

Does maria have a contract of service or a contract : Does Maria have a contract of service or a contract for service with Morneau Insurance Company? As the company's Payroll Manager, write a letter to Paul
What will happen to the retained earnings for paula : What will happen to the retained earnings? Paula employs the book value method to record the conversion of bonds into common stock.
What happens to the npv : Question - Consider Coral Bay. If the land salvage value is changed to $600,000 what happens to the NPV
What is the most likely cause of the decline in bond market : In 2002, Lama acquired at a premium, Jen's 10-year bonds as a long-term investment. What is the most likely cause of the decline in the bond's market value?
What is the after-tax return for the same investor : What is the after-tax return for the same investor if these shares were held in an ordinary savings account? Assume that the investor is in the 30 percent tax
Which the investor interest income for the year would be : Annual interest was received on December 31. Which The investor's interest income for the year would be lowest if the bond was purchased at
What is the amount of the household : A household has a college student dependent qualifying for the American Opportunity Credit. What is the amount of the household's American Opportunity Credit
Find which the premium or discount on bonds purchased : Find which The premium or discount on bonds purchased as a temporary investment generally reported on published financial statements as
Calculate the proceeds on issuance of the bonds : The bonds carry a 6.8% interest rate and are sold at 111.31 to yield 5.5%. They pay interest semi-annually. Calculate the proceeds on issuance of the bonds

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