Question
1. Jonah has the choice of paying Rita $10,000 today or $40,000 in ten years. Assume Jonah can earn a 11 percent after-tax rate of
1. Jonah has the choice of paying Rita $10,000 today or $40,000 in ten years. Assume Jonah can earn a 11 percent after-tax rate of return. What is the present value of the $40,000 payment due in 10 years?
2. Komiko Tanaka invests $11,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 9 percent before-tax rate of return. She plans to invest for the long term. How much cash will Komiko retain, after-taxes, if she holds the investment for 5 years and then she sells it when the long-term capital gains rate is 15 percent?
3. Komiko Tanaka invests $11,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 9 percent before-tax rate of return. She plans to invest for the long term. If she holds the investment for 5 years and then she sells it when the long-term capital gains rate is 15 percent, what is her after-tax rate of return?
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
14th Edition
978-0132960649, 132960648, 132109174, 978-0132109178
