Question
Given the following information: Nominal Initial Cost = $30,000; Nominal Before-tax Net Return = $8,000 Marginal Tax Rate = 10%; Required rate of return =
Given the following information:
Nominal Initial Cost = $30,000; Nominal Before-tax Net Return = $8,000
Marginal Tax Rate = 10%; Required rate of return = 10%
Real Terminal Value = $0; Investment Life = 5 years
Suppose that IRS will allow the investor to depreciate the investment using straight-line over 15 years and the inflation rate is 4%.
(i) What is the nominal terminal value?
a. $0 b. $30,000
c. $31,000 d. $27,000
Enter response here:
(ii) What is the annual depreciation expense?
a. $2,000 b. $2,080
c. $6,000 d. $6,240
Enter response here:
(iii) What is the nominal after-tax terminal value?
a. $2,000 b. $2,900
c. $2,100 d. $2,700
Enter response here:
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A rancher wants to borrow $14,300 for a trailer. The loan would be fully amortized over 17 years at 14% interest.
(i) What is the annual loan payment?
| a. | $2,080.63 | b. | $2,891.01 | |
| c. | $3,082.65 | d. | $2,243.89 |
Enter your response here
(ii) What is the remaining principal balance on the following loan at the end of 8 years?
| a. | $14,300.00 | b. | $13,410.99 | |
| c. | $19,645.30 | d. | $11,099.12 |
Enter your response here
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Financing California Real Estate Spanish Missions To Subprime Mortgages
Authors: Lynne P. Doti
1st Edition
184893601X, 978-1848936010
