ADM 3360 Study Guide - Transfer Tax, Double Taxation, Conrad Black

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peartortoise481

11 Jul 2014

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You have to think like you are going to own capital and build equity. To become self-autonomous financially is: own businesses, own franchises: don"t work the floor but be the boss with the capital. When people who have difficulties they go rent (there is going to be a 2nd recession) The maximum time you need to pay your real estate is 15 years. The bank can give you a 35 year mortgage and you pay it in 15 years. So if there is ever a bad tenant who doesn"t pay rent, you can ask the bank to lower the rate to accommodate these difficulties. > so now sometimes you can skip payments one year since you are ahead. However, do this as a rollover to a corporation once you have equity. You need to build this corporation: owning financial assets. Once you get into a midlife crisis- it is easier when you have equity.

Related Questions

You have determined in your mind that you would like to have a business of your own, although your father runs a family restaurant in your local city. You have therefore, decided to have a medium size snack and cocktails bar which will accommodate the cruise ship passengers who visit your city. You plan to keep the business for five years after which you will sell it off to your brother John for $2,000,000 and go off to do your Masterâs Degree in the UK. Since you will be occupying the establishment from your grandmother for free, you have decided that you need to make some improvements to the property which will cost you $1,500,000. Additionally you will spend $275,000 in bar stools, tables and decorations. The Leasing of such a space in the area would cost $75,000 per year. You will depreciate the assets over 7 years using MACRS. You have determined that you would need an average cash balance of $15,000 and inventory of $20,000 while Accounts payable should average $10,000. You plan to borrow the money from a local bank and pay interest at a rate of 15 percent. To increase your chances of success at the business you plan to have your cousin Johnathan to conduct a market survey which will cost you $100,000. Your new venture will decrease the revenue your family business will earn by $15,000 per year and you have agreed to allow your father to take this amount from your allowance as a shareholder of the family restaurant. Revenues are projected to be $500,000 the first year and is expected to increase by 20% the second year, 15% the third year and to continue to increase at 10% thereafter. Fixed annual operating costs are expected to be salaries of $110,000, Utilities $75,000, Food and Liquor License is 15% of revenues and Taxes are 40% of net revenues.

Required:

(A). Calculate the initial outlay of the project.

(B). Calculate the annual after-tax operating cash flow for Years 1 -5.

(C). Determine the terminal year (in year 5) after-tax non-operating cash flow.

(D). What is the project NPV?

(E). What is the estimated Internal Rate of Return (IRR) of the project? Should the project be accepted based on the IRR criterion? Why?

PLEASE ANSWER ALL QUESTIONS AND SHOW ALL WORKINGS.

viridiancockroach434

You have determined in your mind that you would like to have a business of your own,
although your father runs a family restaurant in your local city. You have therefore, decided
to have a medium size snack and cocktails bar which will accommodate the cruise ship
passengers who visit your city. You plan to keep the business for five years after which you
will sell it off to your brother John for $2,000,000 and go off to do your Masterâs Degree in
the UK. Since you will be occupying the establishment from your grandmother for free, you
have decided that you need to make some improvements to the property which will cost you
$1,500,000. Additionally you will spend $275,000 in bar stools, tables and decorations. The
Leasing of such a space in the area would cost $75,000 per year. You will depreciate the
assets over 7 years using MACRS. You have determined that you would need an average cash
balance of $15,000 and inventory of $20,000 while Accounts payable should average $10,000.
You plan to borrow the money from a local bank and pay interest at a rate of 15 percent. To
increase your chances of success at the business you plan to have your cousin Johnathan to
conduct a market survey which will cost you $100,000. Your new venture will decrease the
revenue your family business will earn by $15,000 per year and you have agreed to allow your
father to take this amount from your allowance as a shareholder of the family restaurant.
Revenues are projected to be $500,000 the first year and is expected to increase by 20% the
second year, 15% the third year and to continue to increase at 10% thereafter. Fixed annual
operating costs are expected to be salaries of $110,000, Utilities $75,000, Food and Liquor
License is 15% of revenues and Taxes are 40% of net revenues.

A. Calculate the initial outlay of the project.

B. Calculate the annual after-tax operating cash flow for Years 1 -5.

C. Determine the terminal year (in year 5) after-tax non-operating cash flow.

D. What is the project NPV?

E. What is the estimated Internal Rate of Return (IRR) of the project? Should the project be accepted based on the IRR criterion? Why?

mauvegnat341

1. The Social Security Act, adopting in 1935, called for workers to make payroll tax payments, which were then pooled to pay retirement benefits to primary workers. Survivor benefits (paid to spouses and dependents of the primary worker) and disability benefits were added later, in 1939 and 1956, respectively. The first benefit payments were made in 1940, after the great depression in which many suffered due to lack of savings and bank failures. This was at a time many people still lived in rural parts of the country and had limited access to financial services that allowed for safe steady returns on savings. Now, financial services are readily available to anyone; it has never been easier to save for retirement. Since the social security system is based on having current worker pay payroll taxes to fund payments to retired workers, some have argued that the Social Security system is not sustainable given the unbalanced demographics, with far more retired people who are supposed to receive benefits than younger workers who are paying in.

a. In your opinion, has social security outlived its usefulness? That is, are some of the original justifications for the Social Security system still relevant or have conditions changes such that there is less of a social need for Social Security.

b. If, by the time you retire, social security benefits have been significantly reduced or eliminated completely, would you be bothered. Why? If you know that this is very likely now (at the start of your working career), does this bother you? Why? How might you behave differently?

2. In your own words, answer the following questions: What is a Managed Care Organization (MCO)? What is a Health Maintenance Organization (HMO)? What are capitation payments? What are the incentives of an HMO in terms of providing low cost care? Are there any adverse incentives for an HMO to cut costs by cutting quality? How might these adverse incentives be mitigated?

lemonox668

ADM 3360 Study Guide - Transfer Tax, Double Taxation, Conrad Black

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