Komiko Tanaka invests $12,000 in LymaBean Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term. (Do not round intermediate calculations. Round "After-tax rate of return" to 2 decimal places and other answers to the nearest whole dollar amount.)
| a-f. |
Calculate how much cash will Komiko retain, after taxes, if she holds the investment for
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(1) 5 years and sells it when the long-term capital gains rate is 15 percent. |
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(2) 5 years and sells it when the long-term capital gains rate is 25 percent. |
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(3) 15 years and sells it when the long-term capital gains rate is 15 percent. |
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Also, calculate Komiko's after-tax rate of return on her investment in (1), (2) and (3)?
| investment per=5 yr; LT Cap Gain rate =15% | Invest per=5 yr; LT cap gain rate = 25% | investper=15yr;LTcapgainrate=15% |
| Proceedfromsale |
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| basis in shares |
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| gain realized on sale |
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| tax rate on gain |
15% |
25% |
15% |
| tax on gain |
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| cash retained after taxes |
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| after tax rate of retrun |
% |
% |
% |
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