Question

Komiko Tanaka invests $13,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before tax rate of return She plans to invest for the long term. a. How much cash will Komiko retain, after-taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Cash retained b. What is Komiko's after-tax rate of return on her investment in part (a)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.) Aferta rate nam

Answer 1

Answer:-

a)$13000 × (1.10)^5=$20936

amount received(13,000) basis in stock

$7,936 long­term capital gain×15 percent= 1190 tax on gainCash retained=$20936 − 1190 taxes = $19746

b.($19746/13,000)^1/5− 1 = 8.72 percent

c.$13000 × (1.10)^5=$20936 amount received(13,000) basis in stock

$7,936 long­term capital gain×25%= 1,984 tax on gain

Cash retained=$20936 − 1,984 taxes = $18952

d.($18952/13,000)^1/5− 1 = 7.83 percent

e.$13,000 × (1.10)^15=$54304

amount received(13000) basis in stock

(54304 -13000=$41304 long­term capital gain×15%= 6196

tax on gainCash retained=$54304 − 6196 taxes = $48108

f.($48108/13,000)^1/15− 1 = 9.11 percent