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Principles of Finance_Biederman_Date_030310

Principles of Finance_Biederman_Date_030310 - -Had some...

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Look at Basic Valuation Model (slide in handout) - Value of any financial asset is equal to its discounted assed of cash flows - K=picks up risk (higher risk= lower value) includes inflationary expectation - Useful for analyzing policy (projected impact of stock/bond if something happens) Look at APWR Financials slides and be able to analyze them How do you beat the street? Taxation: Some federal income tax issues are based on principle of ability to pay (how much taxable income is) - Progressive (increases they more $ you make - Complex (very few people understand laws) - Indexed (except AMT)- inflation; if increase income 2% inflation 2% Regressive tax- burden falls heaviest to those who have least ability to pay—example: state sales tax Ability to pay Benefits received (buy what you want example: road tolls) - Discourage savings, dividends, double taxation - Often used to promote policy
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Unformatted text preview: -Had some bizarre element Alternative Minimum Tax (AMT) Must calculate taxes two ways-What everyone else does-If a certain level put part of deductions on table to be taxed 28% Double taxation- pay tax of profit then send dividend to shareholder and the shareholder is taxed-Tax expenditure-Marriage tax: need to be married to live together (not anymore) Increase taxes on an asset, decrease cash flow, decrease value (reganomics—supply side economics) Replace asset with GDP if raise taxes, decrease cash flow to private sector then decrease GDP— fewer jobs-Increase cash flows= decrease taxes IRS2005 Tax rates for Single individual-We will fall into either single or jointly—tax brackets-Marginal tax rate = rate tax you pay on last $ subject to tax-Taxable income brackets for 2008, raised to 16050, 10%= effect on index...
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