Computation of Inflation Rate over the 10 years: | |
Inflation Rate | |
=(New CPI-Old CPI)/Old CPI | |
=(100-86)/86 | |
16.28% | |
(a) 1. Change in Real After Tax Income: | |
Beginning After Tax Income | $40,000 |
Ending Real After Tax Income | |
=Nominal Income/(1+Inflation Rate) | |
=55000/(1+16.28%) | $47,299.62 |
Change in Real After Tax Income | |
=(47299.62-40000)/40000 | 18.25% |
(a) 2. Change in Nominal After Tax Income: | |
Beginning After Tax Income | $40,000 |
Ending Nominal After Tax Income | $55,000 |
Change in Nomianl After Tax Income | |
=55000-40000)/40000 | 37.50% |
Thus, the % change in Real after-tax income DOESN'T MATCH with the % change in after-tax Nominal Income. | |
(b) | |
Change in Real Income | 18.25% |
Inflation Rate | 16.28% |
Thus, change in Real Income HAS KEPT UP with the inflation rate. |
During the same 10-year period, your after-tax income rose from 540,000 to $55.000. The compo CPI...
During a 10 year period, your annual nominal income increases from 60,000 dollars to 90,000 while the inflation rate is 2% per year. Then your real income has increased by how much?
After-Tax Profit Targets Olivian Company wants to earn $540,000 in net (after-tax) income next year. Its product is priced at $350 per unit. Product costs include: Direct materials $105.00 Direct labor $77.00 Variable overhead $17.50 Total fixed factory overhead $420,000 Variable selling expense is $14 per unit; fixed selling and administrative expense totals $270,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of $540,000. $ 2. Calculate the...
Questions 4,5,6and 7
f 7.5% per year after tax over 5 years. During the five 4. An organization's financial statements show an average ROA o year period, general inflation increased by 2.5% what is the net ROA after tax for the organization? 5. Microsoft Co. places l 00,000 inan investment that has a return of 6% The investment is placed there for 7 years, and then at the end of 8 year, annual withdrawals begin and continue for 5 ycars...
1) What is the incremental annual after-tax Cash Flow
earned from owning leasing ?
2) Assuming at the end of year 10 the buyer of the building
determinate they could landlord, attract a new tenant, lease the
building and obtain the following NOI:
Rent
250,000
Operating Expenses
75,000
Real Estate taxes
40,000
NOI 135,000
What is the implied cap rate if the building is sold for
$2,250,000?
to decide if the new office leasing are estimated in the s will...
a) Determine the after-tax cash flows from year 0 - year 2
b) Determine the present worth of the project
c) Determine the IRR of the project
10.43 Gentry Machines, Inc., has just received a special job order from one of its clients. The following financial data on the order have been collected: • This two-year project requires the purchase of a special-purpose piece of equipment for $55,000. The equipment falls into the MACRS five-year class. . The machine will...
[40 MARAUT ECTION A Answer ALL questions in this section. (20 Marks) QUESTION 1 1 to 1 10 in your answer book Choose the most appropriate answer. Write down numbers write the letter that represents the correct answer. E.g. 1.11 A iswer book and next to each number 1.1 The rise in the value of one currency in relation to another is: a) Depreciation of the currency. b) An appreciation of the currency. c) A debasement of the currency. d)...
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $50,000 has today. He wants all of his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes...
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $40,000 has today. He wants all of his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes...
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $50,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that...
Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $45,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that...