a. Calculation of after tax cost if pays on December
Tax savings in current year = $20,000*37%=$7400
After tax cost = Cost of bill - Tax savings = 20,000-7400=$12,600
b. Calculation of after tax cost if pays on January
Tax savings in next year = $20,000*37%=$7400
Present value of $1 at 12% for one year = 0.893
Present value of tax savings = $7400* .893=$6607
After tax cost = $20,000-6607=$13393
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $25,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $25,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 20 percent this year and next year, and that she can earn an after-tax rate of return of 6 percent on her Investments. a. What is...
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Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $35,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $35,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments. a. What is...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $80,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $80,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 6 percent on her investments. b. What is...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $28,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $28,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 40 percent this year and next year, and that she can earn an after-tax rate of return of 11 percent on her investments. o. What is...
QUESTION 1 Isabel, a calendar year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $21,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $21,000 bill anytime before January 30 of next year without penalty Assume her marginal tax rate is 32 percent this year and next year, and that she can earn an afer-tax rate of return of 6 percent on her investments....
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $25,000 bill from her accountant for consulting services related to her small business. Reese can pay the $25,000 bill anytime before January 30 of next year without penalty. Assume Reese's marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 9 percent on her...
1.0Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $21,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $21,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments. What is the...