Norman Dowd owns his own taxi, for which he bought a $10,800 permit to operate two years ago. Mr. Dowd earns $32,400 a year operating as an independent but has the opportunity to sell the taxi and permit for $40,500 and take a position as dispatcher for Carter Taxi Co. The dispatcher position pays $31,500 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $40,500 and can earn a 12 percent return. Required

Norman Dowd owns his own taxi, for which he bought a $10,800 permit to operate two years ago. Mr. Dowd earns $32,400 a year operating as an independent but has the opportunity to sell the taxi and permit for $40,500 and take a position as dispatcher for Carter Taxi Co. The dispatcher position pays $31,500 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $40,500 and can earn a 12 percent return. Required

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 56P: Hassad owns a rental house on Lake Tahoe. He uses a real estate firm to screen prospective renters,...

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Steve John owns his own taxi, for which he bought a Rs. 18,000 permit to operate two years ago. Mr. John earns Rs. 36,000 a year operating as an independent but has the opportunity to sell the taxi and permit for Rs. 73,000 and take a position as dispatcher for Santino Taxi Co. The dispatcher position pays Rs. 31,000 a year for a 40-hour week. Driving his own taxi, Mr. John works approximately 55 hours per week. If he sells his business, he will invest Rs. 73,000 and can earn a 10 percent return. Required Determine the opportunity cost of owning and operating the independent business. Based solely on financial considerations, should Mr. John sell the taxi and accept the position as dispatcher? iii. Discuss the qualitative as well as quantitative factors that Mr. John should consider.
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