On May 1, 2018, Karina purchased 100 shares of Gold stock at a total cost of $2,000. She received a total of $150 in dividends and sold the stock for $2,280 on May 15, 2019. Karina has a combined state and federal marginal tax rate of 28%. Her tax rate on both long-term capital gains and dividend income is 15%. What is her after-tax holding period return on her investment in Gold stock? 21.50% 23.48%

On May 1, 2018, Karina purchased 100 shares of Gold stock at a total cost of $2,000. She received a total of $150 in dividends and sold the stock for $2,280 on May 15, 2019. Karina has a combined state and federal marginal tax rate of 28%. Her tax rate on both long-term capital gains and dividend income is 15%. What is her after-tax holding period return on her investment in Gold stock? 21.50% 23.48%

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

See similar textbooks

Similar questions

You are trying to estimate the value of the XYZ Inc. company, as of the end of 2018. The after-tax cashflow from assets (FCFF) for the year ending 2018 is $145 million. The estimated WACC is 10%, What comes closest to the current value of the firm XYZ if the cashflow from assets are expected to grow at a constant rate of 2% in the future? 1849 million 1479 million 2113 million 1813 million 1450 million
1.Mr Adrian own a construction company with an asset worth RM400,000. Adrian proudly told to some of his fellow directors that his revenues were typically RM35,000 per month, while his operating cost for fuel was RM8,000 and maintenance RM5,000 per month. The estimated depreciation was RM10,000 per month. An office space similar to Peter 's office space can be rented for RM15,000 per month. If Peter was working for one of his competing construction companies, he would have earned RM5,000 per month. a.List the items that Adrian would consider to compute his explicit costs. b.List the items that Adrian would consider to compute his implicit costs. c.Compute Adrian monthly total economic cost. d.Should Adrian continue his business? Explain.
Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 15 percent, and its annual fixed expenses are $245,000. The firm’s income-tax rate is 30 percent. Required:1. Calculate the firm’s break-even volume of service revenue.2. How much before-tax income must the firm earn to make an after-tax net income of $138,000?3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $138,000?4. Suppose the firm’s income-tax rate changes to 20 percent. What will happen to the break-even level of consulting service revenue? Calculate the firm’s break-even volume of service revenue. How much before-tax income must the firm earn to make an after-tax net income of $138,000? What level of revenue for consulting services must the firm generate to earn an after-tax net income of $138,000? (Do not round intermediate calculations. Round your final answers to the…
A cost-cutting project will decrease costs by $64300 a year. The annual depreciation will be $14,250 and the tax rate is 24 percent. What is the operating cash flow for this project? Mugle Choce O O $52136 $48,70 $45.296 $11.964 $1,804
An investment of $1.000.000 will be included in the 7-year MACRS class for depreciation. It would also require an additional $150,000 to invest in inventory and would add $50,000 to accounts payable. Will generate $400000 in revenue and $150000 in cash expenses annually. The tax rate is 21 per cent. What are the incremental cash flows for years 0, 1, 7 and 8?
When determining the present worth of the after-tax cash flows of an investment purchased using borrowed funds, which of the following are required? I. Principal and interest component for each loan payment II. Tax rate applied to the taxable income generated by the investment III. Depreciation deductions for the investment IV. Before-tax and loan cash flows for the investment V. MARR. a. I, III, IV, and V only b. II, III, IV, and V only c. IV and V only d. All items (I, II, III, IV, and V).
Explain why the after-tax cashflow is the cash inflow in this project.
In year 0 you purchase an asset for $500,000 and in year 1 you receive a positive cash flow of s100,000 from operating the asset. Following a MACRS 7-year depreciation schedule (year 1 recovery rate of 14.29 percent) and assuming you are in a 39% tax bracket, what is your year 1 after tax cash flow (ATCF) to the nearest $50 ? a) $400,000 b) $28,550 c) $11,250 d) $88,750 e) $380,750
Advise ABC Pty Ltd and Liberty Pty Ltd on the tax implications of the following arrangement.a. ABC Pty Ltd owns a country property bought as a potential factory site on whichthere is a considerable amount of gravel. At the start of the current income year,ABC granted to Liberty Pty Ltd the exclusive right for five years to excavate andremove gravel from the land in return for payments calculated as follows:i. a minimum payment by Liberty of $5,000 per month regardless of whetheror not any gravel is removed during that particular month;ii. subject to para (a), payment each month by Liberty of 50 cents per cubicmetre of gravel removed in that month; andiii. provided that if it is found at the end of any year that the total volume ofgravel removed in that year did not exceed 48,000 m3, then ABC will refundto Liberty any amount in excess of $50,000 paid by Liberty in that year underthe terms of the agreement mentioned in para (a).
Given: Before -Tax Cash Flow (BT-CF) for Kal Tech Systems in 2012 for an equipment that will be depreciated using the SL method with salvage value of $10,000. Year 0 1 2 3 4 5 BT-CF -$120,000 32,000 32,000 32,000 32,000 32,000 Market value - $36,000 What is the after-tax return if the company is in the 34% income tax bracket? The incremental tax rate is 34%. Also, it is known that the before-tax return is 16.65% Group of answer choices 9.65% 11.29% 10.16% 10.99%
In the year 2019, a corporation made $18.8 Million in revenue, $2.2 Million of operating expenses, and depreciation expenses of $6.4 Million. The state income tax rate is 11% and the federal income tax rate is 21%. How much (a) state income tax, and (b) federal income tax will this corporation pay in this tax year? Assume that the state income tax is a tax-deductable expence when filing federal income tax. .... The approximate state income tax is $ Million (Round to three decimal places.) The approximate federal tax is S Million. (Round to three decimal places.) The combined effective income tax rate is%. (Round to the nearest decimal.) The ATCF for the year 2019 is $ Million. (Round to three decimal places.)
Juan DeBaptist purchased $10,000 in corporate stock on June 1 and sold the stock when its value reached $13,000 on October 26. Ignoring stock transaction fees, what federal taxes did Juan pay on this stock investment if his taxable income is $90,000? Assume a capital gains tax rate of 15%.