Incremental income tax rate

Assignment Help Business Economics

Reference no: EM131810381

A house and lot are for sale for $155,000. It is estimated that $45,000 is the land's value and $110,000 is the value of the house. The net rental income would be $12,000 per year after taking all expenses, except depreciation, into account. The house would be depreciated by straight-line depreciation using a 27.5-year depreciable life and zero salvage value. Mary Silva, the prospective purchaser, wants a 10% after-tax rate of return on her investment after considering both annual income taxes and a capital gain when she sells the house and lot. At what price would she have to sell the house at the end of 10 years to achieve her objective? You may assume that Mary has an incremental income tax rate of 28% in each of the 10 years.

Reference no: EM131810381

Questions Cloud

Discuss what is the maximum income tax rate : What is the maximum income tax rate that applies to the employee salary, the employment tax rate

Purchasing the electronic testing device : What minimum equal annual benefit must Able obtain before taxes in each of the 5 years to justify purchasing the electronic testing device?

What is the net st or lt gains and losses : What is the net ST or LT gains and losses for 2007? What is the appropriate tax treatment of the net gain or loss.

What is the firm cost of equity : The stock price after the announcement settled at $16 a share. What is the firm's cost of equity

Incremental income tax rate : You may assume that Mary has an incremental income tax rate of 28% in each of the 10 years.

Explain the accounting valuations for the post control step : Do you agree or disagree with the GAAP treatment of reporting additional investments in subsidiaries when control has previously been established?

Problem-raindrops are falling at an average rate : Raindrops are falling at an average rate of 30 drops per square inch per minute.

How much can it afford to pay for the computer : If the firm wants a 15% rate of return, after considering both state and federal income taxes, how much can it afford to pay for the computer?

How much gain is recognized by walter on the sale of house : How much gain is recognized by Walter on the sale of the house? What is the basis of the new house purchased by Walter?

User Account

All Pages