This figure is substrated from the acquisition giving a result of £332,641 which is the written down value. The capital allowance for the first year is £66,528 which is shown in appendix 9 Corporation tax worked out at the main rate of 21% from 1st of April of 2011 (Reference 7). The profit substrates the capital allowance and gives the taxable profit for the next year which is shown in appendix
Questions 1. According to ValueLine estimates in Figure 1, James River’s expected annual dividend growth rate from the 91–93 to 97–99 period is 5.50%, and the next dividend (1995) is expected to be $0.60. Assume that the required return for James River was 8.36% on January 1 1995 and that the 5.50% growth rate was expected to continue indefinitely. a. Based on the Constant Growth Rate or Gordon Model, what was James River’s price at the beginning of 1995?
Therefore, the cost of fixed rate debt equals 8.95% plus 1.1% risk premium, which totaled to 10.5% Cost of Debt = (0.5 x 0.08) + (0.5 x 0.105) = 0.095 = 9.25% [since floating rate and fixed rate debt both weigh 50%, we use the weighted average approach to calculate the total cost of debt rate] Based on historical data analysis below, we get an average income tax rate of 42%. | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | Income before income taxes | 83.5 | 105.6 | 103.5 | 121.3 | 133.7 | 185.1 | 236.1 | 295.7 | 360.2 | 398.9 | Income tax | 35.4 | 43.8 | 40.6 | 45.2 | 50.2 | 76.7 | 100.8 | 128.3 | 168.5 | 175.9 | Tax rate | 42% | 41% | 39% | 37% | 38% | 41% | 43% | 43% | 47% | 44% | | | | | | | | | | | | Average tax rate | 42% | | | | | | | | | | After-tax cost of debt = (1 - 0.42) x 0.0925 = 0.05365 = 5.365% Cost of Equity From Table B and Exhibit 5, * Risk free rate (1-year)= 6.9% Premium = 8.47% * Risk free rate (10-year)= 8.95% Premium = 7.43% ** ** Since A rated bond is considered upper medium grade and the company is A rated, we assume long-term
After that time, the truck (with an expected life of eight years) will be returned to the lessor. Ace has an incremental borrowing rate of 6 percent. The lessor has an implicit annual interest rate of 8 percent built into the contract. Ace is aware of this implicit rate. The present value of a four-year annuity due of $10,000 at a 6 percent annual rate is $36,700.
But the stated interest payment is $5,000, thus the $784 interest expense is amortization of the bond discount. Question # 3 The interest rate is determined by finding the value in Appendix B equal to $35,000 divided by the annual payments of $13,581 for a period of 3 years. (35,000/13,581 = 2.577). The interest rate is 8%. Amortization
(1) Prepare the journal entry to record (accrue) the employer's payroll for May. (2) Prepare the journal entry to pay for the May payroll. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid
(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) YTM _____ % 3. Grand Adventure Properties offers a 7 percent coupon bond with annual payments. The yield to maturity is 5.85 percent and the maturity date is 8 years from today. What is the market price of this bond if the face value is $1,000?
The Rule of 78s is computed on a sum-of-the-payment-periods digits basis. On a one-year loan with monthly payments, for example, the sum of the digits I through 12 is 78. DAVIDSON, SCINDLEt, STICKNEY & WELLS, supra, at 47. The following is an interest calculation under the Rule of 78s: a borrower takes out a 30-year loan, with annual interest payments calculated under tile Rule of 78s. To determine what part of each payment will constitute interest, the total amount of the interest will be multiplied by a fraction.
The NCAA rules. Retrieved July 3, 2008, from Yahoo Web site: http://sports.yahoo.com/ncaaf/news?slug=ys-bush_ncaarules&prov=yhoo&type=lgns Whiteside, K. (2006, August 31). College athletes want cut of action. Retrieved July 4, 2008, from USA TODAY Web site:
Lease problems: Homework 1 – due Tu March 6, 2012 Problem 2 On January 1, Year 1, Burton Company leases equipment from Nelson Company for an annual lease rental of $10,000. The lease term is five years and the lessor’s interest rate implicit in the lease is 8%. The lessee’s incremental borrowing rate is 8.25%. The useful life o the equipment is five years, and its estimated residual value equals its removal cost. Annuity tables indicate that the present value of an annual lease rental of $1 (at 8% rate) is $3.993 (three dollars and 99.3 cents).