Determine tax savings from tax deduction in present value

Assignment Help Financial Management

Reference no: EM131616481

Ramon has decided to make his $95,000 gift to the American Heart Association in the form of cash. However, he is considering delaying his gift until next year when his AGI will increase to $300,000 and he will be in the 33% income tax bracket, an increase from his current-year income tax bracket of 28%. Assume a 6% discount rate. The present value factors, at a 6% discount rate, are as follows:

Year PV Factor at 6%

1 0.9434

3 0.8396

5 0.7473

If required, round your final answers to the nearest dollar.

Ramon asks you to determine the tax savings from the tax deduction in present value terms if he were to make the gift this year, rather than delaying the gift until next year.

For purposes of this analysis, ignore the potential impact of the overall limitation on certain itemized deductions.

Total present value of tax savings from the tax deduction if made this year: $

Total present value of tax savings from the tax deduction if made next year: $

Reference no: EM131616481

Questions Cloud

Bond ratings playing in the pricing of bond : What role do Moody’s Standard & Poor’s, or Fitch’s bond ratings playing in the pricing of a bond?

What is the projected net present value of the new project : What is the projected net present value of the new project?

About the yield of a bond : When we talk about the yield of a bond, we usually mean the yield to maturity of the bond. Why?

What is the firm aftertax cost of debt : The outstanding bonds of Tech Express are priced at $989 and mature in 10 years. What is the firm's aftertax cost of debt?

Determine tax savings from tax deduction in present value : Ramon asks you to determine the tax savings from the tax deduction in present value terms if he were to make the gift this year,

Company executives use the cash conversion cycle : How could ABC Company executives use the Cash Conversion Cycle (CCC) to improve performance, i.e., improve on its strengths and correct its weaknesses?

The cash conversion cycle to determine firm value : How do you use the Cash Conversion Cycle to determine a firm’s value? How does the cash flow from operations differ from the statement of cash flow?

Assuming that the two investments are equally? risky : Assuming that the two investments are equally? risky, which one should Douglas? recommend? ? Why?

What impact would the simultaneous attacks have on economy : What impact would these simultaneous attacks have on the national economy and the local communities throughout the United States?

User Account

All Pages