Discussion 1 Submitted

Discussion 1 Submitted - REAL INTEREST RATES Security Mean...

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JAMIE ALDRED PROBLEM 1-2 CORPORATE INCOME TAX Corporate Tax Rates 15% $0-50,000 25% 50,001-75,000 34% 75,000-100,000 39% 100,000-335,000 34% 335,000 and over DATA Sales 5,000,000 Cost of Goods Sold (2,000,000) Gross Profit 3,000,000 Operating Expenses (1,000,000) Interest income 2,000,000 Dividend income 25,000 Less: 70% (17,500) 7,500 Interest Expense (100,000) Taxable income 1,942,500 Capital Gains and Losses: Security gain 40,000 Security loss (50,000) Loss on S-T capt gain (10,000) Capital losses that exceed capital gains in any year may not be deducted from ordinary income. Tax Liability: 15.00% $0-50,000 7,500.00 25.00% 50,001-75,000 6,249.75 34.00% 75,000-100,000 8,500.00 39.00% 100,000-335,000 91,650.00 34.00% 335,000 and over 546,550.00 Taxes due : 660,450
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JAMIE ALDRED PROBLEM 2-2
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Unformatted text preview: REAL INTEREST RATES Security Mean Nomial Yield % Mean Inflation Rate % Inferred Real Rate % 3 Month Treasury Bills 4.34 2.78 1.56 30 Year Treasury Bonds 7.33 2.78 4.55 YEAR 3-Month Treasury Bill 30-year Treasury Bill Inflation Rate 1991 5.42 8.14 3.1 1992 3.45 7.67 2.9 1993 3.02 6.59 2.7 1994 4.29 7.37 2.7 1995 5.51 6.88 2.5 Mean: 4.34 7.33 2.78 3 Month Treasury Bills 4.34 (Round up to 4.34) 30 Year Treasury Bonds 7.33 Inflation Rate 2.78 3 Month Treasury Bills 30 Year Treasury Bonds (Nominal Interest Rate) - (Inflation Rate) = Real Interest Rate 1.56 4.55 The 30-year real rate exceeds the 3-month real rate because of the maturity premium demanded by investors....
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