1. Kelly's marginal tax rate is 33% and discount rate is 12%. What is Kelly's present value, after-tax cost if she pays $300,000 for an asset at the beginning of the year and if the cost is amortizable over 2 tax years? Kelly receives the tax savings from amortization deductions at the end of each tax year.
($201,000)
($206,000)
($216,000)
($221,000)
($300,000)
2. Kim's expected cash payment to a seller is $500,000 and her marginal tax rate is 40%. Kim will receive tax savings from the payment (if there are any) at the time of the payment. What is Kim's ATCF if the payment is 50% tax deductible?
($600,000)
($500,000)
($250,000)
($300,000)
($400,000)
3. Dave asks your advice about whether to continue a mail-order part of his business. Mail-order transactions generate extra cash sales of $30,000. These transactions require deductible cash expenses of $20,000, non-deductible cash expenses of $4,000, and deductible non-cash expenses of $5,000. What is Dave's after-tax cash flow from these operations if his marginal tax rate is 20%?
$5,800
$5,000
$4,800
$4,000
$0
4. Chris' expected pre-tax bonus is $20,000. Chris earns a base salary of $30,000. Chris files as a single taxpayer with no itemized deductions. (Use the 2016 standard deduction and one personal exemption to figure his taxable income and the 2016 single tax rate schedule to figure his tax. What is Chris's expected ATCF from the bonus?
$16,800
$17,000
$26,700
$15,800
$15,000