SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
42nd Edition
ISBN: 9780357161548
Author: Raabe
Publisher: Cengage
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A man who is 30 years old at the start of the year, is considering getting an MFM degree. He currently earns $40,000 per year and expects to continue earning that amount for the rest of his working life (until age 65). He will give up his income for two years and will pay $20,000 per year in tuition, if he attends business school. In exchange, he expects a raise in his salary after completing his MFM. Assume that the post-graduation salary grows at a 5% annual rate and that the discount rate is 8%. What is the minimum expected starting salary after graduation for him that makes attending business school a positive-NPV investment? (Assuming that all cash flows happen at the end of each year.) Use Time Value of Money calculations.
Ashley begins a very successful graphic design company on January 10, 2021. She decides not to incorporate and remains a sole proprietor, earning $80,000 in net business income. In the past she has never had business income, and is wondering if this will change, when she has to file her taxes. Her net tax owing in 2010 was $4,100 and in 2020 was $3,200. She expects her net owing in 2021 to be around $3,500 Required: Explain to Ashley if she will have to pay instalments? Explain to her whether instalments are required, and if applicable, why. 1 A BIG Provide your answer here: 1. 9-
Sara owns a small business and plans on retiring in 5 years. Given his past experiences, she expects that the business will be worth $1,000,000 when she retires. However, Sara is willing to sell her business today for $850,000. Assuming the business is a viable ongoing activity, would this be a good investment (for the buyer) if the discount rate at 7%? Why or why not?
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