Credit and taxes

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 Relied Reconcilliation Act of 2003)
The condominium-expected annual increase in market value = 5%.

High Yield corporate stocks-expected dividend yield = 8%.

Savings account in a commercial bank -expected annual increase in market value = 10%; expected dividend yield = 0. PLEASE HELP, candy


A yield of 10% on a bank savings account (through accrued interest) is totally unrealistic, but the after-tax yield would be (1-0.28) x 10% = 7.2%, since the earnings would be treated as ordinary income.

Stock dividends would be taxed at 15%, assuming the Brittens were not subject to AMT, so the after-tax yield of the high-yield stocks would be 0.85 x 8% = 6.8%

The expected annual condo increase in value of 5% would be treated as long-term capital gains if they own the property long enough. That tax rate is 15% so the effective yield would be 0.85x5% = 4.25%, but there would be the additional benefits of not having to pay rent, less the disadvantages of having to pay for property tax, insurance and maintenance.


Thank you!

candy!


mjxqt yjcbm vfxauhd xcviyufq fspgb pketorvs rmxywdkv

  1. 👍 0
  2. 👎 0
  3. 👁 48
asked by candy

Respond to this Question

First Name

Your Response

Similar Questions

  1. Personal Finance Concepts

    How to set up the problem. Calculate the after-tax yields on the foregoing investments, assuming the Brittens have a 28% marginal tax rate. And they are going to purchase a condominium for $100,000 with an expected annual increase

    asked by Karen on April 4, 2010
  2. Personal Business Concepts

    Bernie and Pam brittten are a young couple beginning careers and establishing a household. They will each make about $50,000 next year and will have accumulated $40,000 to invest, they now rent an apartment but are considering

    asked by Jessie on June 22, 2008
  3. Personal Finance

    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

    asked by Bill on January 15, 2009
  4. UIC

    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

    asked by Mizzy Kay on May 4, 2009
  5. Personal Finance

    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

    asked by Nicole on August 30, 2007
  6. PERSONAL FINANCE

    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

    asked by JERYL on August 31, 2007
  7. Finance

    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

    asked by Jes on July 20, 2006
  8. Personal Finance

    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

    asked by Sue on October 11, 2008
  9. Credit and Taxes

    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). Municipal bonds expected

    asked by candy on July 21, 2006
  10. credit and taxes

    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. That looks like an amendment/correction to your previous

    asked by candy on July 19, 2006

More Similar Questions