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2.
The Coldmarket government is considering several excise taxes on wool. They need to generate at least $1,150 in revenue to fund the construction of the fort, but they also wish to minimize the loss of surplus to consumers and producers. They are considering the following excise tax amounts:
$1.50
$3.00
$4.50
$6.00
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Solved in 2 steps
- The current equilibrium price and quantity in the chewing gum market are $3 and 156,000 units, respectively. The government introduces a tax of $0.75 per unit which leads to the price that buyers pay to increase to $3.25 and the price that sellers receive to fall to $2.50, while the quantity traded drops to 150,000. 1) Calculate the tax incidence on buyers and sellers. Who bears the largest burden of the tax? 2 ) What is the revenue that the government collects from the tax? Show all your calculations either in the answer box below or on the file you will upload. If your calculations are on the uploaded file, your final answer should still be in the answer box below. Round your results to two decimal places if needed.The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse. The existing line was purchased several years ago for $600,000. The line’s book value is $200,000, and Fleming management feels it could be sold at this time for $150,000. A new, increased capacity line can be purchased for $1,200,000. Delivery and installation of the new line are expected to cost an additional $100,000. Assuming Fleming’s marginal tax rate is 40%, calculate the net investment for the new line.You are expanding your operations and buying a new machine. The new machine will cost $440,000 and will cost $22,000 to ship and install. The new machine will make more products so you will need to purchase $40,000 of inventory to meet the demand. You plan to operate the machine for two years and then sell the machine for $200,000. The corporate tax rate is 35%. If the depreciation rates are 12% in Year 1 and 18% in Year 2, what is the depreciation tax shield for Year 1 of the project? Group of answer choices A. $21,696.00 B. $17,680.00 C. $18,984.00 D. $19,404 E. $18,080.00
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- Can you help in calculating the NPV for this ? Consider the following data - A machine costs $600 today (year 0). Assume this investment is fully tax-deductible, as stipulated by the new US corporate tax code of 2018. - This company has current pre-tax profits from other projects that are greater than $600, so it can take full advantage of the investment tax break above in year 0. - The machine will generate operating profits before depreciation (EBITDA) of $312 per year for 5 years. The first cash flow happens one year after the machine is put in place (year 1). - Depreciation is not tax-deductible. Notice that you do not need to calculate depreciation at all to solve this problem since it has no effect on taxes. - The tax rate is 21%…Genesis Corporation want to purchase a piece of machinery for $150,000 that will cost $20,000 to have it delivered and installed. Based on past information, they believe they can sell the machinery for $25,000 in 5 years. The company’s marginal tax rate is 34%. If the applicable CCA rate is 20% and the required return on this project is 15%, what is the present value of the CCA tax shield?Shunt Technology will spend $800,000 on a piece of equipment that will manufacture fine wire for the electronics industries. The shipping and installation charges will be $240,000 and net working capital will increase $48,000.The equipment will replace an existing machine that has a salvage value of $75,000 and a book value of $125,000. If Shunt has a current marginal tax rate of 34 percent, what is the net investment?
- Imagine the country is made up of 100 households. The federal government needs to collect $800,000 in income taxes to be able to function. The population consists of 6 groups: Group A: 20 households that earn $12,000 each Group B: 20 households that earn $29,000 each Group C: 20 households that earn $50,000 each Group D: 20 households that earn $79,000 each Group E: 15 households that earn $129,000 each Group F: 5 households that earn $295,000 each This scenario is roughly proportional to the actual United States population and tax needs. We are going to determine new income tax rates. The first proposal we’ll consider is a flat tax – one where every income group is taxed at the same percentage tax rate. 1) Determine the total income for the population (all 100 people together) 2) Determine what flat tax rate would be necessary to collect enough money. The second proposal we’ll consider is a modified flat-tax plan, where everyone only pays taxes on any income over $20,000. So, everyone…Suppose you have been hired by President Emmanuel Macron of France as an economic policy consultant. In order to finance an increase in unemployment benefits, the French government needs to raise €10 billion in additional tax revenue. President Macron is considering two policies to achieve this goal: a new tax on gasoline or a new tax on bequests (money left to your children or other heirs). Which of these two policies would be the most economically efficient? Why? Explain why the policy you recommended in a.) might be politically unpopular. Dismayed by your assessment, President Macron proposes a third alternative: a broad decrease in current taxes. Explain why this could increase tax revenue for the French government, but it is unlikely to work in practice.A cooperative that makes value-added products like jams and jellies has voted to purchase a new machine to fill their jars. The machine costs $21,000 and has a investment life of 8 years. The IRS will allow them to depreciate it over 15 years. The marginal tax rate will be 18% over the next 9 years and the inflation rate will be 1.5%. The cooperative requires a 12% pre-tax rate of return and the risk premium is 3%. What is the present value of the tax savings from depreciation? Please select the correct one : $1,314 $1,216 $1,239 $1,261 None of the answers are correct