61. (LO4) Assuming Alexa receives $20,000 in gross rental receipts, answer the following questions: Gross rental receipts $20,000 Less Tier 1 (2,000) (property taxes) Income after Tier 1 18,000 Less Tier 2 (5,900) (insurance, rep & main, utilities) Income after Tier 2 12,100 Less Tier 3 (14,500) Taxable rental income (loss) (2,400) a. What effect does the rental activity have on her AGI for the year? According to the text, a rental activity (including a second home rental) is considered to be a passive activity. Because they are passive losses, losses from rental property are generally not allowed to offset other ordinary or investment type income.
Increase in Art Fees Earnedb. Decrease in Prepaid Rentc. Decrease in Unearned Feesd. Increase in Common Stocke. Increase in Depreciation Expense, Buildingsf.
2. Interest rates fall, which stimulates the demand for investment goods. 3. The currency depreciates, which stimulates the demand for net exports. (p.748).
b. shortage of loanable funds and the interest rate will fall. c. surplus of loanable funds and the interest rate will rise. d. shortage of loanable funds and the interest rate will rise. 3. Suppose that the nominal interest rate was 3 percent and the inflation rate was 1 percent.
a. Sales exceeded the budget by 10.7% ($75,000 ÷ $700,000), while cost of merchandise increased by 22.9% and salaries increased by only 11.4%. Thus, the investigation should focus on cost of merchandise since a 22.9% increase is disproportionate to the increase in sales. b. Electricity would not be a controllable cost for the manager of sporting goods, and it is doubtful that including it on a performance report for sporting goods would be
If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10%? *It will take 5 years to payback the investment. Therefore, will not make the movie. See below.
If a widow has $93,000 investment yielding 9% annually, she can NOT withdraw $16,000 a year for the next 10 years. PV = Payment x [1-(1.09)-10]/0.09; Pmnt = $93,000/[1-(1.09)-10]/0.09; Pmnt = $14,491.26 7. No I will not buy it because the current price is higher than the present value of the investment. PV of Annuity= 10,000 x [1-(1.10)-25]/0.10; PV of Annuity = $90,770.40 12. FV = PV x (1+r)5; $100,000 = $65,000 x (1=r)5; 1.53846 = (1+r)5; (1.53846) 1/5 = 1+r; 1.08998 = 1+r; annual rate = 8.998$ 13.
▪ Consumers might expect prices to fall further and cut back consumption now. 12. When interest rates rise, people are: ▪ More likely to borrow, that is, purchase a financial asset. ▪ More likely to borrow, that is, sell a financial asset. ▪ Less likely to borrow, that is, sell a financial asset.
| | | | b) | $3,000 LTCG. | | | | c) | $11,000 LTCG. | | | | d) | Loan basis of $10,000. | | Hide Feedback | | | RATIONALE: The $11,000 distribution reduced the $10,000 income, so there is no “net increase” to be applied to the loan basis. Thus, the $11,000 distribution reduces the new $10,000 stock basis to zero, with a $1,000 LTCG.
a. The MRS and the MRT are not equal. b. The budget line is steeper than the indifference curve at the current consumption level (Y is on the vertical axis and X is on the horizontal axis). c. The consumer’s total utility would increase if he/she chose consumption such that MUX increases and MUY