If Oliver can earn 6.9% interest on a City of Bloomington bond and 10.4% interest on a Dragon, Inc. corporate bond, what would his marginal tax rate have to be to make him indifferent between the two bonds? Express your answer as a decimal, and round to the nearest second decimal place. For example if you arrived at an answer of 16.7%, type 0.17 into the box below.
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- You acquired the following capitals for your own business. $100,000 comes from your family, which is interest free. $200,000 comes from your best friend. He charges you 4% APR for the loan. $300,000 comes from a bank as a 10 year note. The bank charges you 7.5% APR for the loan. Assume there is no tax, what is your WACC? (Please round up your answers to two decimals and write in percentage points. e.g. If your answer is 8.7896%, type 8.79 without the percentage sign)Consider the decision of whether to hold wealth as money or as an interest-earning asset that pays a nominal rate of 6%. If you hold wealth as an interest-earning asset, you will have (1000/1060/1030/970) in wealth at the end of the year. If you hold the wealth as money, you will have (1000/1060/1030/970) in wealth at the end of the year. Holding wealth as an interest-earning asset therefore gives you (6%/ 3%) more purchasing power than you would have if you held the wealth as money. This illustrates that the relevant interest rate for calculating opportunity cost of holding wealth as money is the (real/nominal) interest rate. Now consider the decision of whether to spend your wealth today or hold it as an interest-earning asset to spend in a year. Again, assuming inflation is stable at 3%, the purchasing power of €1,000 held as an asset with a nominal rate of 6% will be (1000/1060/1030/970) in one year, compared to the (1000/1060/1030/970) in purchasing power you…Jake has total fixed monthly expenses of $1,300 and his gross monthly income is $3,900. What is his debt-to-income ratio? How does his ratio compare to the desired ratio? Debt-to-income ratio = % (Round to the nearest integer as needed.)
- Jake has total fixed monthly expenses of $1,320 and his gross monthly income is $3,950. What is his debt-to-income ratio? How does his ratio compare to the desired ratio? Debt-to-income ratio = % (Round to the nearest integer as needed.) Jake's ratio is V the maximum percentage.Percentages need to be entered in decimal format, for instance 3% would be entered as .03 in the interest rate cells.) Bruce invested $1,250 (present value - enter as a negative number) 10 years ago. Today, the investment is worth $3,550 (future value). If interest is compounded annually, what annual rate of return did Bruce earn on his investment? (Use Solving for r - Rate of Return- on a Lump Sum) Mario wants to take a trip that costs $4,750 (future value), but currently he only has $2,260 (present value - enter as a negative number) saved. If Mario invests this money at 7% compounded annually, how long will it take for his investment to grow to the needed amount of $4,750? Round to the nearest whole number representing the number of years. (Use Solving for n - Time - on a Lump Sum)Anna has the following income for the quarter: a. Professional income P80,000 b. Income from her business P30,000 c. Compensation income P40,000 d. Interest income from bank deposit P10,000. 1. What amount of income will Anna report in her quarterly income tax return? a. P80,000 b. P110,000 c. P120,000 d. P150,000 2. If Anna, opted to use 8% rate, how much is her income tax due in her quarterly ITR? a. P6,400 b. P8,800 c. P9,600 d. P12,000
- Jessica's utility of income is represented by: U(I) = V(241) where I represents annual income. She is offered a job that has a 0.3 chance of earning $21970 and a 0.7 chance of earning $62150 a year. How much would Jessica be willing to pay to insure against the risky income? Answer: $ (DO NOT ROUND YOUR CALCULATIONS UNTIL YOU REACH THE FINAL ANSWER. ENTER YOUR RESPONSE ROUNDED TO TWO DECIMAL PLACES, AND NO SEPARATOR FOR THOUSANDS.)A home equity line of credit (HELOC) is, loosely speaking, like a credit card for your home. You can borrow money by drawing down on the line of credit. But, because the borrowed money is for the purpose of your home, the interest is tax-deductible meaning that you can deduct the interest paid on this money from your income to reduce your taxes. If the current annual interest rate on a HELOC is 3.85\%3.85% and your tax rate is 32\%32%, what is the after-tax interest rate you will pay on any borrowings under the HELOC?Answer each of the following independent questions. Ignore personal income taxes. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Suppose you invest $4,100 in an account bearing interest at the rate of 10 percent per year. What will be the future value of your investment in five years? 2. Your best friend won the state lottery and has offered to give you $11,600 in four years, after he has made his first million dollars. You figure that if you had the money today, you could invest it at 8 percent annual interest. What is the present value of your friend’s future gift? 3. In four years, you would like to buy a small cabin in the mountains. You estimate that the property will cost you $68,500 when you are ready to buy. How much money would you need to invest each year in an account bearing interest at the rate of 4 percent per year in order to accumulate the $68,500 purchase price? 4. You have estimated that your educational expenses…
- To be sure that you understand how to use the tables in Appendix A at the end of this book, solve the following exercises. Ignore income tax considerations. The correct answers, rounded to the nearest dollar, appear on page 855. Q.If the unpaid mortgage on your house in 12 years will be $249,600, how much money do you need to invest at the end of each year at 6% to accumulate exactly this amount at the end of the 12th year?You decided it is important to pay off some of your debt to help build your credit score. If you paid $1,307 interest on $45,000 at 4.0%, what was the time, using exact interest?(a) Explain the differences between annual percentage rate (APR) and effective annual rate (EAR). (b) Phoebe is considering selling her entire stock holding and depositing the money ($500,000 in total) into a bank account. She has obtained the following information about two banks: Bank X: 12% APR with monthly compounding Bank Y: 13% APR with semi-annual compounding (iii) How much money will Phoebe have in Bank X’s account if the interest earned is withdrawn at the end of each month to pay for living expenses of the following month? Explain (without calculation) in NO MORE THAN THREE LINES your answer. (iv) Explain the difference in the bank account balance in parts (ii) and (iii), with supporting calculations by showing the 5-year interest on principal, 5-year interest on interest and the total interest.