QuickHelper

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About QuickHelper

Levels Tought:
Elementary,High School,College,University,PHD

Expertise:
Accounting,Applied Sciences See all
Accounting,Applied Sciences,Business & Finance,Chemistry,Engineering,Health & Medical Hide all
Teaching Since: May 2017
Last Sign in: 262 Weeks Ago
Questions Answered: 20103
Tutorials Posted: 20155

Education

  • MBA, PHD
    Phoniex
    Jul-2007 - Jun-2012

Experience

  • Corportae Manager
    ChevronTexaco Corporation
    Feb-2009 - Nov-2016

Category > Business & Finance Posted 30 May 2017 My Price 7.00

Where do I start?

Question description

 

 

Bill Smith, a manager of a restaurant/bar in Los Angeles, is in the 25% marginal tax bracket and pays an additional 5% in taxes to the state of California. Bill has $20,000 invested in corporate bonds which is currently earning an average annual return of 7.5%.

Additionally, Bill also has another $20,000 invested in municipal bonds from the city of Los Angeles that are being used to redevelop depressed areas downtown. These bonds pay an average return of 5.4%.

Assume that in both cases, Bill earns the same returns as calculated on both the corporate and municipal bonds each year for the next 15 years.

Answer the following:

  • What is the after-tax return on Bill’s corporate bonds for the current year?
  • What is the after-tax return on his municipal bonds for the current year?
  • Which investment earns more returns: corporate or municipal bonds?
  • What would the balance in each account be at the end of the fifteenth year?Question description

     

     

    Bill Smith, a manager of a restaurant/bar in Los Angeles, is in the 25% marginal tax bracket and pays an additional 5% in taxes to the state of California. Bill has $20,000 invested in corporate bonds which is currently earning an average annual return of 7.5%.

    Additionally, Bill also has another $20,000 invested in municipal bonds from the city of Los Angeles that are being used to redevelop depressed areas downtown. These bonds pay an average return of 5.4%.

    Assume that in both cases, Bill earns the same returns as calculated on both the corporate and municipal bonds each year for the next 15 years.

    Answer the following:

    • What is the after-tax return on Bill’s corporate bonds for the current year?
    • What is the after-tax return on his municipal bonds for the current year?
    • Which investment earns more returns: corporate or municipal bonds?
    • What would the balance in each account be at the end of the fifteenth year?

Answers

QuickHelper
(10)
Status NEW Posted 30 May 2017 03:05 PM My Price 7.00

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