Post a New Question

Personal Finance

posted by .

Bernie and Pam Britten are a young married couple beginning careers and establishing a household. They will each make about $50,000 next year and will have accumulated about $40,000 to invest. They now rent an apartment but are considering purchasing a condominium for $100,000. If they do, a down payment of $10,000 will be required.

They have discussed their situation with Lew McCarthy, an investment advisor and personal friend, and he has recommended the following investments:

The condominium - expected annual increase in market value = 5%.
Municipal bonds - expected annual yield = 5%.
High-yield corporate stocks - expected dividend yield = 8%.
Savings account in a commercial bank-expected annual yield = 3%.
High-growth common stocks - expected annual increase in market value = 10%; expected dividend yield = 0.
Calculate the after-tax yields on the foregoing investments, assuming the Brittens have a 28% marginal tax rate (based on Public Law 108-27, The Jobs and Growth Tax Relief Reconciliation Act of 2003).
How would you recommend the Brittens invest their $40,000? Explain your answer.

  • Personal Finance -

    Considering that in these tough financial times, the expected increases in market value, dividends, and interest are probably unrealistic, I'd put $20,000 into the condo and the rest into a money market or savings account. Also, there's no guarantee that they'll both keep their jobs. It's important to have money set aside that is easily liquidable.

  • Personal Finance -

    I also would "fire" Mr. McCarthy as my investment advisor.

  • art -

    i want to know about art it is for homework and i want a easy pic PLEASE!!!

Answer This Question

First Name
School Subject
Your Answer

Related Questions

More Related Questions

Post a New Question