i know when people ask help for homework they get alot of flack. but can someone please help?
Bernie and Pam Britten are a young married couple beginning careers and
establishing a household. They will each make about $50,000 next year
and
will have accumulated about $40,000 to invest. They now rent an
apartment
but are considering purchasing a condominium for $100,000. If they do,
a
down payment of $10,000 will be required.
They have discussed their situation with Lew McCarthy, an investment
advisor
and personal friend, and he has recommended the following investments:
•The condominium - expected annual increase in market value = 5%.
•Municipal bonds - expected annual yield = 5%.
•High-yield corporate stocks - expected dividend yield = 8%.
•Savings account in a commercial bank-expected annual yield = 3%.
•High-growth common stocks - expected annual increase in market value
=
10%; expected dividend yield = 0.
1.Calculate the after-tax yields on the foregoing investments,
assuming the
Brittens have a 28% marginal tax rate (based on Public Law 108-27, The
Jobs
and Growth Tax Relief Reconciliation Act of 2003).
2.How would you recommend the Brittens invest their $40,000? Explain
your
answer.
SHOW ALL WORK FOR EACH ASSIGNMENT AND EXPLAIN EACH STEP CAREFULLY.
2007-02-21
10:21:39
·
3 answers
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asked by
auroa26
3