Homework Answers
| WORKING NOTES : 1 | |||
| CALCULATION OF NET DIVIDEND EARNED AFTER TAX | |||
| Dividend Received = | $ 4.00 | ||
| Less: Income tax @ 25% | $ 1.00 | ||
| Net Dividend Earned | $ 3.00 | ||
| WORKING NOTES : 2 | |||
| CALCULATION OF CAPITAL GAIN EARNED ON INVESTMENT | |||
| Selling rate of Stock | $ 60.00 | ||
| Less: Purchase value of the stock | $ 75.00 | ||
| Loss in purhcase of stock | $ -15.00 | ||
| Note: No Capital gain tax because there is no gain on sale of stock | |||
| SOLUTION: | |||
| CALCLATION OF HOLDING PERIOD RETURN OF INVESTMENT | |||
| Holding Period return = Gain (Loss) on purchase of Stock + Net Dividend Earned / purhcase value of stock | |||
| Holding Period return = $ - 15 + $ 3 / $ 75 | |||
| Holding Period return = $ - 12 / $ 75 | |||
| Holding Period return = - 0.16 or - 16.00% | |||
| Answer = Option 2 = - 16.00 % | |||
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After the sale of the stock on December 2nd, 2018, your cost
basis per share is closest to:
a. $27.50 b. $28.16 c. $29.29 d. $50.83 e. $52.50
Use the following information from questions 6-12. In both 2018 and 2019 you expect to receive a W2 for $200,000; $65,000 will be already withheld on your W2 for federal income taxes and your income tax bracket is 32%. The short term capital gains on investments (<1 year) are taxed like income,...
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