Preview

Fin 205

Good Essays
Open Document
Open Document
492 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Fin 205
1.1)

Belinda’s 2010-11 taxable income:
Assessable Income
Gross Salary $67,500
Unfranked dividends $2,300
Total Assessable Income $69,800
Less Allowable deductions
PAYG tax instalments deducted ($15,500)
Subscriptions ($130)
Union fees ($600)
Telephone expense ($280*30%) ($84)
Total allowable deductions ($16,314)
Taxable Income $53,486

Note:
Stationery is considered to be expenditure of a private nature thus is not tax deductable.

1.2)
Belinda’s 2010-11 net tax payable / refund including the Medicare levy:
Taxable Income $53,486
Gross Tax Payable ($4,650+30% of the excess over $37,000)
[$4650+[($53,486-$37,000)*30%]] $9,595.80
Less: Tax Offset ($312)
Add Medicare Levy (1.5%) $802.29
Net Tax Payable $10,086.09

2a)
The total initial investment amount made by Ricky in XLNT
= Share Units*Initial Share Price
= 3,000*$7.10
= $21,300

2b) The exit fee if Ricky sells his total investment after 6 months = Share Units*Current Share Price*5% = (3,000*$8.86)*5% = $1,329 2c) The total pre-tax proceeds that Ricky will realise assuming the investment is sold after 6 months = Sales Revenue+Income Distribution-Initial Investment Amount-Exit Fee = (3,000*$8.86)+(3,000*$0.40)-$21,300-$1,329 = $26,580+$1,200-$21,300-$1,329 = $5151 2d)
The pre-tax annualised absolute return to Ricky assuming the investment is sold after 6 months
= [(market value at the end of the evaluation period- market value at the beginning of the evaluation period+Income distribution)]/Purchase Price*100
= [(3,000*$8.86)-(3,000*$7.10)+(3,000*$0.40)]/(3,000*$7.10)*100
= [($26,580-$21,300+$1,200)/$21,300]*100
= 30.42%

2e) Tax will Ricky be liable for upon the current sale of his total investment in XLNT
= Share Units*Current Share Price*Tax Rate
= 3,000*$8.86*30%
= $26,580*30%
= $7,974

2f)
Total after-tax

You May Also Find These Documents Helpful

  • Satisfactory Essays

    FIN 415 Week 3 Set I

    • 472 Words
    • 3 Pages

    6-1. (Expected rate of return and risk) Carter Inc. is evaluating a security. One-year Treasury bills are currently paying 9.1 percent. Calculate the investment…

    • 472 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Fin 301 Final

    • 658 Words
    • 3 Pages

    One of the most important things to do in business is to make money. The point of risking yourself financially is to make money on your investment. It is your lively hood. It is important to do all you can to make more and grow your business. Increasing your gross profits means more money in your business and ultimately your pocket. These are simple ways to increase it.…

    • 658 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Ch 6 Question

    • 785 Words
    • 3 Pages

    a.) The payment qualifies for stock redemption treatment. Julio’s tax liability would be $52,500 ($500,000-$150,000=$350,000*15%=$52,500).…

    • 785 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Fin 100

    • 271 Words
    • 2 Pages

    From your knowledge of current events, discuss what you view as the most important economic policy of today. State your rationale for choosing this economic policy.…

    • 271 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Fin 111

    • 419 Words
    • 2 Pages

    FIN111 Tutorial Solution Week 2 Ross Chapter 1 Critical Thinking and concepts review Chapter 1 1. Capital budgeting (deciding on whether to expand a manufacturing plant), capital structure (deciding whether to issue new equity and use the proceeds to retire outstanding debt), and working capital management (modifying the firm’s credit collection policy with its customers). Disadvantages: unlimited liability, limited life, difficulty in transferring ownership, hard to raise capital funds. Some advantages: simpler, less regulation, the owners are also the managers, sometimes personal tax rates are better than corporate tax rates. To maximise the current market value (share price) of the equity of the firm (whether it’s publicly traded or not). In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm’s management. This separation of ownership from control in the corporate form of organisation is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the shareholders. If such events occur, they may contradict the goal of maximising the share price of the equity of the firm. Since such organisations frequently pursue social or political missions, many different goals are conceivable. One goal that is often cited is revenue minimisation; i.e., providing their goods and services to society at the lowest possible cost. Another approach might be to observe that even a not-for-profit business has equity. Thus, an appropriate goal would be to maximise the value of the equity.…

    • 419 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Calculating OCF. Hammett, Inc., has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest expense of $1,750. If the tax rate is 35 percent, what is the operating cash flow, or OCF?…

    • 536 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    fin 600

    • 2175 Words
    • 32 Pages

    FIN 600 – Lecture 3 Discounted Cash Flow Valuation Chapter Outline Time Value of Money Valuation: The One-Period Case The Multiperiod Case Compounding Periods Simplifications What Is a Firm Worth? Time Value of Money    …

    • 2175 Words
    • 32 Pages
    Good Essays
  • Powerful Essays

    Fin225

    • 2237 Words
    • 9 Pages

    6/17/2013 What to expect from this lecture Expect this lecture to: • Complement your subject materials • Address the topic’s learning outcomes and key themes topic s • Apply real world examples where feasible to the learning outcomes and key themes • Be linked to the market conditions current at the time the recording is made 1 © Kaplan Higher Education Pty Ltd 2012 trading as Kaplan Online Higher Education FIN227 Mining Investment Analysis Topic 5: The Oil & Gas Industry John Clayton Managing Director, Portunus Corporate Advisory 1 6/17/2013 COMMONWEALTH OF AUSTRALIA…

    • 2237 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Fin 415

    • 2420 Words
    • 10 Pages

    "Unless you have strong contagion into Spain and Italy, it's unlikely to be really an issue that would undermine the whole euro zone." The Greek impasse, created when voters sick of austerity deprived the two main parties which back the country's international bailout programme of a parliamentary majority, has potentially increased the risk of it having to restructure its debts for a second time.…

    • 2420 Words
    • 10 Pages
    Good Essays
  • Good Essays

    A single cash inflow of $12,000 in five years, discounted at a 12% rate of return.…

    • 622 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Fly by Night

    • 709 Words
    • 3 Pages

    Option A Yr 10 ($) Yr 11($) Yr 12 ($) Yr 13 ($) Yr 14 ($) Yr 15 ($)…

    • 709 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    tax solution

    • 3583 Words
    • 15 Pages

    W.N. 1 Computation of Income Under the Head Profits & Gains from Business or Profession:…

    • 3583 Words
    • 15 Pages
    Good Essays
  • Powerful Essays

    Novifiles

    • 8656 Words
    • 35 Pages

    . Additional for each lineal family member related by blood marriage who is a full dependent up to a maximum of three 1,320,000 each…

    • 8656 Words
    • 35 Pages
    Powerful Essays
  • Satisfactory Essays

    Income Tax

    • 782 Words
    • 4 Pages

    * He earned income by selling capital assets, listed company share for 400,000 which he bought for 300,000 and kept for 10 months.…

    • 782 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Fin 580

    • 312 Words
    • 2 Pages

    1. (TCO D) The most valuable single technique in personal risk management to assist an individual in determining how much life insurance is needed is: (Points : 4)…

    • 312 Words
    • 2 Pages
    Satisfactory Essays