Kirk Van Houten, who has been married for 17 years, would like to buy his wife a
ID: 2771626 • Letter: K
Question
Kirk Van Houten, who has been married for 17 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be S32,019 in 13 years. Kirk currently has S4,650 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring? Note: A financial calculator may be necessary to compute the answer.) compute the answer) %, Round to the nearest The annual rate ofreturn Krk must earn on whole number) st vestment to accumulate enough money to pay or tengsExplanation / Answer
The annual rate of return that Kirk must earn on his investment to accumulate enough money to pay for the ring 13 years from now= 16% per annum on annual compounding basis..
Use the Compounding formula for getting this answer: $32019= $4650 (1+ r/100)13 ......
Thus, using iteration function in MS Excel spreadsheet, we can obtain the answer to the above equation as: r= 16% per annum on annual compunding basis.
GROSS Income for year 2011, of the single parent with one child is given= $41300..
Less:Personal Exemption for self = $3700
Less: Personal Exemption for the one dependant Child= $3700
Less: Standard Deduction amount (Head of Household status)= $8500
Thus, Taxable Income= $41300-$3700-$3700-$8500= $25400= Taxable Income for year 2011..
Taxation rate for year 2011= 15% based on Federal Income Tax bracket of $12,151 – $46,250 of Taxable Income (under Head of Household status)
Thus, for this single parent with a single child, the tax liability for year 2011 works out to
= $25400 - ($25400*0.15) - $1000 of Tax Credit for the one dependant Child= $3810 - $1000= $2810 [ANSWER]
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