4. A bank has 50 million dollars available for the next year to distribute to pe
ID: 360721 • Letter: 4
Question
4. A bank has 50 million dollars available for the next year to distribute to people and businesses seeking loans. With every type of loan, there is always a small percentage of loans that end up in default. For these, neither the principal nor the interest can be recovered at all. These are called bad debts. The percentage of bad debts in each category is fairly consistent from year to year, and from past data are approximately known. The interest rates for the next year on the different types of loans, as well as the approximate percentage expected to default on each type of loan during the next year, are given in the following table: % Bad debts Type of loan Interest rate Personal Car Home Farm Commercial 0.14 0.11 10 0.115 0.095 In order for the banks to be competitive with other banks in the area, they must allocate at least 30% of their loans to farm and commercial loans, while home loans must equal no less than 50% of the total loans given out for personal purposes, car, and homes. Assuming that the ratio of bad debts to all loans made must be s0.03, how much must be given out in each area for the bank to maximize their annual net income from these loans? (Assume that there is a demand for whatever types and amounts of loans they decide to loan out.)Explanation / Answer
Ms. Susan Smart,
USA.
Subject: Tax Return for Year 2015.
Dear Madam,
Based on the information provided by you we have made necessary calculations and are hereby attaching you the tax return calculation on your Income for the year 2015.
You have mentioned that you have sold the seld occupied property on July 1, 2015 at $1,100,000. This income is excluded from your income as you owned your home and lived in it for at least 2 years out of the 5-year period leading up to the sale.But in this case you cannot claim the deduction for depreciaition as that was a self occupied preperty for 2015.
The normal calulation tax based on your income is as follows:
It looks like you will owe additional tax in the amount of $8719 based on the data you have submitted.
Also we advise you to filke Form 1040 relating to the income arising from sale o
Filing Status: Single Dependents: 1 Exemptions: 2 Exemption Value: 8000 Income: 70000 Adjustments to Income: 0 Adjusted Gross Income(AGI): 70000 Standard Deduction: 6300 Itemized Deduction: 0 Taxable Income: 55700 Tax: 9719 Credits: 1000 Other Taxes: 0 Payments: 0 Your Tax Bracket: 25% Your Effective Tax Rate: 17%Related Questions
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