Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 1, Problem 9DQ
To determine
Identify the preferable offer for
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The city of Columbia is considering extending the runways of its municipal airport so that commercial jets can use the facility. The land necessary for the runway extension is currently a farmland that can be purchased for $350,000. Construction costs for the runway extension are projected to be $600,000, and the additional annual maintenance costs for the extension are estimated to be $22,500. If the runways are extended, a small terminal will be constructed at a cost of $250,000. The annual operating and maintenance costs for the terminal are estimated at $75,000. Finally, the projected increase in flights will require the addition of two air traffic controllers at an annual cost of $100,000. Annual benefits of the runway extension have been estimated as follows (shown): Apply the B–C ratio method with a study period of 20 years and a MARR of 10% per year to determine whether the runways at Columbia Municipal Airport should be extended.
The city of Columbia is considering extending the runways of its municipal
airport so that commercial jets can use the facility. The land necessary for the
runway extension is currently a farmland that can be purchased for $350,000.
Construction costs for the runway extension are projected to be $600,000, and
the additional annual maintenance costs for the extension are estimated to be
$22,500. If the runways are extended, a small terminal will be constructed
at a cost of $250,000. The annual operating and maintenance costs for the
terminal are estimated at $75,000. Finally, the projected increase in flights
will require the addition of two air traffic controllers at an annual cost of
$100,000. Annual bemefits of the runway extension have been estimated as
follows:
Rental receipts from airlines leasing space at the facility
$325,000
$65,000 Airport tax charged to passengers
$50,000
$50,000
Convenience benefit for residents of Columbia
Additional tourism dollars for Columbia
Apply the…
The environmental protection agency of Verdesi County would like to
preserve a piece of land as a wilderness area. The current owner has
offered to lease the land to the county for 20 years in return for a lump-sum
payment of $1.1 million, which would be paid at the beginning of the 20-
year period. The agency has not yet estimated benefits, but has observed
the following in two other very similar counties:
County
Sanders
Entry Fee
$0.75
$0.50
Annual Visitors
55,000
110,000
Liu
Assume that the lease price represents the social opportunity cost of the
land and that the appropriate real discount rate is 4 percent.
A. Calculate the annual benefits accruing to recreational users of the
Verdesi County preservation, assuming that the county does not
charge any entry fee.
B. Assuming that the yearly benefits, which are measured in real dollars,
accrue at the end of each of the 20 years, calculate the net benefits of
leasing the land.
C. Some analysts in the agency argue that the annual real…
Chapter 1 Solutions
Individual Income Taxes
Ch. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - The Sixteenth Amendment to the U.S. Constitution...Ch. 1 - Prob. 4DQCh. 1 - How does the pay-as-you-go procedure apply to wage...Ch. 1 - Jane, a tax practitioner, has reviewed the law on...Ch. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQ
Ch. 1 - Sophia lives several blocks from her parents in...Ch. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - Prob. 14DQCh. 1 - Prob. 15DQCh. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - Prob. 18DQCh. 1 - Prob. 19DQCh. 1 - Prob. 20DQCh. 1 - Elijah and Anastasia are husband and wife who have...Ch. 1 - What is the difference between the Federal income...Ch. 1 - As to those states that impose an income tax,...Ch. 1 - Prob. 24DQCh. 1 - Prob. 25DQCh. 1 - Prob. 26DQCh. 1 - Prob. 27DQCh. 1 - Prob. 28DQCh. 1 - Contrast FICA and FUTA as to the following: a....Ch. 1 - Prob. 30DQCh. 1 - Prob. 31DQCh. 1 - Prob. 32DQCh. 1 - Prob. 33DQCh. 1 - Prob. 34DQCh. 1 - Serena operates a gift shop. To reduce costs of...Ch. 1 - Prob. 36DQCh. 1 - Prob. 37DQCh. 1 - Prob. 38DQCh. 1 - Prob. 39DQCh. 1 - Prob. 40DQCh. 1 - Prob. 41DQCh. 1 - Prob. 42DQCh. 1 - Prob. 43DQCh. 1 - Prob. 44DQCh. 1 - Prob. 45DQCh. 1 - In terms of tax policy, what do the following...Ch. 1 - Prob. 47DQCh. 1 - Prob. 48DQCh. 1 - Prob. 49DQCh. 1 - Prob. 50DQCh. 1 - Using information from this chapter as well as...Ch. 1 - Prob. 3RPCh. 1 - Prob. 4RP
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