3

Determine the future value of a loan of $1850 at 3.6%, compounded monthly for three years and five years. How much money would you save if you were to pay back the loan in three years rather than five? 

mework: Financing Project Development and Pass-Throughs As.... i 2 D points eBook Print References Mc Grow Complete this question by entering your answers in the tabs below. OSHIBA Req Al Req A2 Estimate the construction draw schedule, interest carry, and total loan amount for improvements. (Enter your answers in dollars, not in millions. Round your final answers to the nearest whole amount.) Month 0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month B Month 9 Month 10 Month 11 Month 12 Total Type here to search Draws Direct Costs S Req B1 Interest 0 $ Req B2 Total Monthly Draws (a) + (b) 0 $ Req C Payments Principal OS Reg A1 #1 Req D Total Interest (g) x Payments (d) + (6%/12) (0) 0 $ Saved 0 $ Req A2 > < Prex 2 of 4 0 0 $ Ending Balance(g) Previous Balance +(c)- (d) Next > 7z 6/nmework: Financing Project Development and Pass-Throughs As... 2 D woints eBook ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation Prim References Mc Graw Problem 16-3 OSHIBA As a financial advisor for the Spain Development Company, you have been given the construction and marketing studies for the proposed Timbercreek office project. Several potential sites have been selected, but a final decision has not been made. Your manager needs to know how much she can afford to pay for the land and still manage to return 16 percent on the entire project over its lifetime. The strategic plan calls for a construction phase of one year and an operation phase of five years, after which time the property will be sold. The marketing staff says that a 1.3-acre site will be adequate because the initial studies indicate that this site will support an office building with a gross leasable area (GLA) of 26,520 square feet. The gross building area (GBA) will be 31,200 square feet, giving a leasable ratio of 85 percent. The marketing staff further assures you that the space can be rented for $20.3 per square foot. The head of the construction division maintains that all direct costs (excluding interest carry and all loan fees) will be $3.5 million. The First Street Bank will provide the construction loan for the project. The bank will finance all of the construction costs, site nation fee of 1.5 points. The construction division improvements, and interest carry at an annual rate of 6 percent plus a loan estimates that the direct cost draws will be taken down in six equal amounts commencing with the first month after close. The permanent financing for the project will come at the end of the first year from the Reliable Company at an interest rate of 5 percent with a 4 percent prepaid loan fee. The loan has an eight year term and is to be paid back monthly over a 25-year amortization schedule. No financing fees will be included in either loan amount. Spain will fund acquisition of the land with its own equity. Spain expects tenant reimbursements for the project to be $3.90 per square foot and the office building to be 75 percent leased during the first year of operation. After that, vacancies should average about 5 percent of GPI per year. Rents, tenant reimbursement, and operating expenses are expected to increase by 3 percent per year during the lease period. The operating expenses are expected to be $1015 per square foot. The final sales price is based on the NOV in the sixth year of the project (the fifth year of operation) capitalized at 9.5 percent. The project will incur sales expenses of 4 percent. Spain is concerned that it may not be able to afford to pay for the land and still earn 16 percent (before taxes) on its equity (remember that the land acquisition cost must be paid from Spain's equity). To consider project feasibility, Required: #1. Estimate the construction draw schedule, interest carry, and total loan amount for improvements. a2. Determine total project cost (including fees) less financing and the equity neoded to fund improvements. b1. Estimate cash flows from operations. b2. Estimate cash flow from eventual sale. c. After discounting equity cash inflows and outflows, is the NPV positive or negative? d. If the asking price of the land were $390,000, would this project be feasible? Type here to search Saved vo. VID VOID ND VOID V VOID DID ii < Prev 2 of 4 Next > 7z 8 177 Desktop

Use the provided TVM solver to determine the interest rate on a loan of $5400 if interest is compounded monthly for 72 months and the final amount of the loan is $6965.35. List the values you used for present value, future value, number of years, and number of compounding periods per year.

3 5 points Mc Graw Problem 19-1 ESC Two 15-year maturity mortgage-backed bonds are issued. The first bond has a par value of $10,000 and promises to pay a 11.0 percent annual coupon, while the second is a zero coupon bond that promises to pay $10,000 (par) after 15 years, with interest accruing at 10.5 percent. At issue, bond market investors require a 12.5 percent interest rate on both bonds. Required: a. What is the initial price on each bond? b. Now assume that both bonds promise interest at 11.0 percent, compounded semiannually. What will be the initial price for each bond? F1 c. If market interest rates fall to 100 percent at the end of the fifth year, what will be the value of each bond, assuming annual payments as in (a) (state both as a percentage of par value and actual dollar value)? TOSHIBA Complete this question by entering your answers in the tabs below. Type here to search Required A Required B Required C If market interest rates fall to 10 percent at the end of the fifth year, what will be the value of each bond, assuming annual payments as in (a) (state both as a percentage of par value and actual dollar value)? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Value of bond in dollars Value of the bond in % of par vo PID VOID ID VOID WOND VA VOID OIL OID F2 F3 0 F4 Answer is complete but not entirely correct. $ →8 Bond 1 10,981.81 109.82 % i F5 9/0 S Bond 2 2,145 48 Q 21.45% F6 ▼ < Prev F7 A 3 of 4 F8 Next > F9 0/9 F10 7z F11 8 F12

2 10 points eBook Print d Grow during the first year of operation. After that, vacancies should average about 5 percent of GPI per year. Rents, tenant reimbursement, and operating expenses are expected to increase by 3 percent per year during the lease period. The operating expenses are expected to be $10.15 per square foot. The final sales price is based on the NOI in the sixth year of the project (the fifth year of operation) capitalized at 9.5 percent. The project will incur sales expenses of 4 percent. Spain is concerned that it may not be able to afford to pay for the land and still earn 16 percent (before taxes) on its equity (remember that the land acquisition cost must be paid from Spain's equity). To consider project feasibility. Required: a1. Estimate the construction draw schedule, interest carry, and total loan amount for improvements. a2. Determine total project cost (including fees) less financing and the equity needed to fund improvements. b1. Estimate cash flows from operations. b2. Estimate cash flow from eventual sale. c. After discounting equity cash inflows and outflows, is the NPV positive or negative? d. If the asking price of the land were $390,000, would this project be feasible? Complete this question by entering your answers in the tabs below. Type here to search TOSHIBA vo. Req B1 OID Req Al Reg A2 Req C If the asking price of the land were $390,000, would this project be feasible? Would this project be feasible? Reg 82 DI Reg D < Req C Reg D > < Prev 2 of 4 Next > 7z 7z/nmework: Financing Project Development and Pass-Throughs As... 2 D woints eBook ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation Prim References Mc Graw Problem 16-3 OSHIBA As a financial advisor for the Spain Development Company, you have been given the construction and marketing studies for the proposed Timbercreek office project. Several potential sites have been selected, but a final decision has not been made. Your manager needs to know how much she can afford to pay for the land and still manage to return 16 percent on the entire project over its lifetime. The strategic plan calls for a construction phase of one year and an operation phase of five years, after which time the property will be sold. The marketing staff says that a 1.3-acre site will be adequate because the initial studies indicate that this site will support an office building with a gross leasable area (GLA) of 26,520 square feet. The gross building area (GBA) will be 31,200 square feet, giving a leasable ratio of 85 percent. The marketing staff further assures you that the space can be rented for $20.3 per square foot. The head of the construction division maintains that all direct costs (excluding interest carry and all loan fees) will be $3.5 million. The First Street Bank will provide the construction loan for the project. The bank will finance all of the construction costs, site nation fee of 1.5 points. The construction division improvements, and interest carry at an annual rate of 6 percent plus a loan estimates that the direct cost draws will be taken down in six equal amounts commencing with the first month after close. The permanent financing for the project will come at the end of the first year from the Reliable Company at an interest rate of 5 percent with a 4 percent prepaid loan fee. The loan has an eight year term and is to be paid back monthly over a 25-year amortization schedule. No financing fees will be included in either loan amount. Spain will fund acquisition of the land with its own equity. Spain expects tenant reimbursements for the project to be $3.90 per square foot and the office building to be 75 percent leased during the first year of operation. After that, vacancies should average about 5 percent of GPI per year. Rents, tenant reimbursement, and operating expenses are expected to increase by 3 percent per year during the lease period. The operating expenses are expected to be $1015 per square foot. The final sales price is based on the NOV in the sixth year of the project (the fifth year of operation) capitalized at 9.5 percent. The project will incur sales expenses of 4 percent. Spain is concerned that it may not be able to afford to pay for the land and still earn 16 percent (before taxes) on its equity (remember that the land acquisition cost must be paid from Spain's equity). To consider project feasibility, Required: #1. Estimate the construction draw schedule, interest carry, and total loan amount for improvements. a2. Determine total project cost (including fees) less financing and the equity neoded to fund improvements. b1. Estimate cash flows from operations. b2. Estimate cash flow from eventual sale. c. After discounting equity cash inflows and outflows, is the NPV positive or negative? d. If the asking price of the land were $390,000, would this project be feasible? Type here to search Saved vo. VID VOID ND VOID V VOID DID ii < Prev 2 of 4 Next > 7z 8 177 Desktop

Assuming that the government intervenes in the housing market by regulating the price of houses/apartments/condominiums, what do you think would be the government’s best option, (a) a price ceiling, or a (b) price floor? Who will benefit more from such option chosen? Would choosing an option better or would it be better to leave the workings of a “free market” to take its course?

bussaint, W X Homework: Financing Project Development and Pass-Throughs As... 2 10 points C ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.ml eBook Print References Homework: Financi: X M Question 2 - Home X Grew TOSHIBA during the first year of operation. After that, vacancies should average about 5 percent of GPI per year. Rents, tenant reimbursement, and operating expenses are expected to increase by 3 percent per year during the lease period. The operating expenses are expected to be $10.15 per square foot. The final sales price is based on the NOI in the sixth year of the project (the fifth year of operation) capitalized at 9.5 percent. The project will incur sales expenses of 4 percent. Spain is concerned that it may not be able to afford to pay for the land and still earn 16 percent (before taxes) on its equity (remember that the land acquisition cost must be paid from Spain's equity). To consider project feasibility. Required: a1. Estimate the construction draw schedule, interest carry, and total loan amount for improvements. a2. Determine total project cost (including fees) less financing and the equity needed to fund improvements. b1. Estimate cash flows from operations. b2. Estimate cash flow from eventual sale. c. After discounting equity cash inflows and outflows, is the NPV positive or negative? d. If the asking price of the land were $390,000, would this project be feasible? Complete this question by entering your answers in the tabs below. Reg A1 Liberty University: X NPV Type here to search Req A2 Req Bl Req B2 After discounting equity cash inflows and outflows, is the NPV positive or negative? Vo PID VOID VOID OIL ID VOID V Reg C < Req B2 Req D Saved Reg D > < Prev FIRST TAKE | NBA's X 2 of 4 Next > G 1772/nmework: Financing Project Development and Pass-Throughs As... 2 D woints eBook ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation Prim References Mc Graw Problem 16-3 OSHIBA As a financial advisor for the Spain Development Company, you have been given the construction and marketing studies for the proposed Timbercreek office project. Several potential sites have been selected, but a final decision has not been made. Your manager needs to know how much she can afford to pay for the land and still manage to return 16 percent on the entire project over its lifetime. The strategic plan calls for a construction phase of one year and an operation phase of five years, after which time the property will be sold. The marketing staff says that a 1.3-acre site will be adequate because the initial studies indicate that this site will support an office building with a gross leasable area (GLA) of 26,520 square feet. The gross building area (GBA) will be 31,200 square feet, giving a leasable ratio of 85 percent. The marketing staff further assures you that the space can be rented for $20.3 per square foot. The head of the construction division maintains that all direct costs (excluding interest carry and all loan fees) will be $3.5 million. The First Street Bank will provide the construction loan for the project. The bank will finance all of the construction costs, site nation fee of 1.5 points. The construction division improvements, and interest carry at an annual rate of 6 percent plus a loan estimates that the direct cost draws will be taken down in six equal amounts commencing with the first month after close. The permanent financing for the project will come at the end of the first year from the Reliable Company at an interest rate of 5 percent with a 4 percent prepaid loan fee. The loan has an eight year term and is to be paid back monthly over a 25-year amortization schedule. No financing fees will be included in either loan amount. Spain will fund acquisition of the land with its own equity. Spain expects tenant reimbursements for the project to be $3.90 per square foot and the office building to be 75 percent leased during the first year of operation. After that, vacancies should average about 5 percent of GPI per year. Rents, tenant reimbursement, and operating expenses are expected to increase by 3 percent per year during the lease period. The operating expenses are expected to be $1015 per square foot. The final sales price is based on the NOV in the sixth year of the project (the fifth year of operation) capitalized at 9.5 percent. The project will incur sales expenses of 4 percent. Spain is concerned that it may not be able to afford to pay for the land and still earn 16 percent (before taxes) on its equity (remember that the land acquisition cost must be paid from Spain's equity). To consider project feasibility, Required: #1. Estimate the construction draw schedule, interest carry, and total loan amount for improvements. a2. Determine total project cost (including fees) less financing and the equity neoded to fund improvements. b1. Estimate cash flows from operations. b2. Estimate cash flow from eventual sale. c. After discounting equity cash inflows and outflows, is the NPV positive or negative? d. If the asking price of the land were $390,000, would this project be feasible? Type here to search Saved vo. VID VOID ND VOID V VOID DID ii < Prev 2 of 4 Next > 7z 8 177 Desktop

5 1 eBook Print Financing Project Development and Pass-Throughs As..... References Mc Graw Problem 16-1 OSHIBA The Investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $10,000,000 and the construction cost per unit is $81,600. The current rent to justify the land acqusition is $1.9 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively. Use the following data to rework the calculations in Concept Box 16.2 in order to assess the feasibility of the project Required: a. Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on total cost under the revised proposal? Is the revised proposal financially feasible? b. Suppose the developer could build a 240-unit luxury apartment complex with a cost of $119,000 per unit. Given that NOI is 60% of rents. What would such a project have to rent for (per square foot) to make an 8 percent return on total cost? Complete this question by entering your answers in the tabs below. Required A Type here to search Required B Suppose the developer could build a 240-unit luxury apartment complex with a cost of $119000 per unit. Given that NOI is 60% of rents. What would such a project have to rent for (per square foot) to make an 8 percent return on total cost? Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. per month per unit Saved < Required A i E Prev 1 of 4 Next > 8

BENNY AND MARTHA FRANKLIN CASE Benny and Martha Franklin have come to you for help with their estate plan. Personal Background and Information Benny and Martha Franklin are 55-years-old and have been happily married for 35 years. They are both in excellent health and expect they will live well into their 90s. They live in Virginia and have three children and six grandchildren. The Franklins plan to retire at age 65. The chart below depicts their family as of today. Joe (age 34) 3 Children Sydney (age 10) Will (age 8) Ivan (age 7) 550 Benny & Martha Franklin Jeff (age 29) 1 Child Elizabeth (age 2) James (age 32) 2 Children Jordan (age 7) Joe and James are both married and work in the family businesses. Jeff is a lawyer and is recently divorced with custody over his daughter, Elizabeth. Joe's youngest child, Ivan, was born as a special needs child who needs full time care. Benny and Martha have a great relationship with their daughter- in-laws and consider them part of the family. Chapter 14: Basic Estate Plan Colin (age 5) Benny graduated from MIT and is an aerospace engineer. He started and owns three companies that produce components for various weapons systems for the United States Department of Defense. Joe and James both graduated from West Point Academy and spent several years in the military. They have been working for Benny in various roles for the last couple years. The three businesses are structured as C corporations and are owned entirely by Benny and Martha. The three businesses have appreciated over the last five years at an annual compound rate of growth of 10 percent. Benny expects this rate of growth to continue indefinitely. Martha majored in communications at Boston College and has been a stay-at-home mom. She now helps with the grandchildren regularly and volunteers with the Wounded Warrior Project. Education Information Benny and Martha believe strongly in education and would like their five grandchildren to all attend MIT. Ivan is not expected to attend college. The current cost of undergraduate studies at MIT is $63,000 per year. Tuition has been increasing at an average rate of seven percent and is expected to continue at that rate. chapter 14 Vacation Home Benny and Martha used to spend summers with friends at a home on Martha's Vineyard. They had such fond memories that once they became successful, they decided to purchase a home on Martha's Vineyard. They spend a substantial amount of time with their children and grandchildren at the vacation home every summer. Life Insurance The life insurance policy is a second-to-die policy on the lives of Benny and Martha. The policy has a death benefit of $2 million. Assume the replacement value of the policy is $200,000. The policy is currently owned by Benny and the three boys are the beneficiaries. Investment Real Estate The investment real estate includes several pieces of commercial real estate held in separate entities. The value is expected to increase at an average rate of 10 percent per year. Estate Planning Documents Benny and Martha have basic wills that make optimal use of testamentary bypass trusts and the marital deduction. The wills were designed to avoid all estate tax at the death of the first spouse and to make use of their lifetime exemptions. They also have durable powers of attorney for health care, advanced medical directives and financial powers of attorney. Prior Gifts In 2000, Benny established a Charitable Remainder Annuity Trust and funded it with highly appreciated publicly-traded stock worth $1,000,000. Benny and Martha were the income beneficiaries and the Wounded Warrior Project was the remainder beneficiary. The trust was set up with a ten-year term. In 2009, Benny established an irrevocable trust for each of the three boys and funded each trust with $1 million. The trusts were set up in such a way as to allow the trustee of each trust to provide for the health, education, maintenance and support of the beneficiary. The trusts were established as simple trusts. The trustee is directed to not terminate the trust until the beneficiary turns age 45. The trusts were not set up as crummy trusts. The trusts name the children (born and unborn) of each of the boys as the contingent beneficiaries for each trust. In 2012, Benny gave Uncle George a gift of $1,013,000 in cash. His uncle had been inspirational when Benny was a kid and has fallen on hard times. Martha has not made any taxable gifts in her past. Benny and Martha Franklin Case 551 Goals: Prepare a Proper Estate Plan 1. Minimize estate taxes. 2. Fund college education for the five grandchildren. 3. Set up a special needs trust for Ivan's future needs. 4. Ensure that the vacation home is a permanent family home for children and grandchildren. 5. Keep 100 percent of business interests in the family. 6. Maintain control of the business until retirement at which time James and Joe will take over. 7. Transfer an additional $2 million to the Wounded Warrior Project some time in the future. Financial Statements Balance Sheet 552 ASSETS Cash/Cash Equivalents JT Checking and Savings Total Cash/Cash Equiv. Invested Assets JT Marketable Securities JT Business Interests H 401(k) Plan JT Investment Real Estate Total Investments Personal Use Assets JT Primary Residence JT Vacation Home JT Autos JT Household Furnishings H Life Insurance Total Personal Use Total Assets Chapter 14: Basic Estate Plan $1,000,000 $1,000,000 $6,000,000 6,000,000 1,250,000 3,000,000 $16,250,000 LIABILITIES AND NET WORTH Liabilities Current Liabilities JT Credit Card Total Current Liabilities Long-Term Liabilities JT Mortgage Primary Total Long-Term Liabilities Total Liabilities $2,000,000 1,500,000 100,000 500,000 200,000 $4,300,000 $21,550,000 Total Liabilities and Net Worth Net Worth $100,000 $100,000 $1,000,000 $1,000,000 $1,100,000 $20,450,000 $21,550,000 Statement of Income and Expenses Statement of Income and Expenses Mr. and Mrs. Franklin Statement of Income and Expenses for Past Year CASH INFLOWS Salaries Income Investment Income Total Cash Inflows CASH OUTFLOWS Lifestyle Needs (includes debt repayment) Income Taxes Property Taxes Homeowner's Insurance Health Insurance Long-term Care Insurance Disability Insurance Life Insurance Total Fixed Outflows Excess Cash Flow $900,000 $400,000 $500,000 $400,000 $100,000 $25,000 $25,000 $25,000 $25,000 $100,000 Totals $1,300,000 $1,200,000 $100,000 chapter 14 Benny and Martha Franklin Case 553 Case Assumptions 1. They want to make maximum use of their annual exclusions. 2. They want to maintain total control over their business interests until retirement. 3. They are willing to fully utilize their gift and estate applicable credits any time to accomplish the best plan. 4. The long-term AFR is 3%. 5. Any minority transfer of business interests will receive a 25% discount. 6. Their life expectancies for GRAT or QPRT purposes are as follows: 554 95% 75% 50% 25% Him 5 years 20 years 30 years 35 years Her 5 years 25 years 35 years 40 years 7. Their principal residence and the vacation home are appreciating at 10% per year and are expected to continue to grow at that rate. Directions for the Case 1. What are the steps Benny and Martha should take immediately and over the long-term to reduce their gross estate and achieve their goals. Be specific and quantify the impact of each recommendation. Chapter 14: Basic Estate Plan 2. Prepare the gift tax returns for 2009 and 2012, as well as for the current year, based on recommendations. The applicable credit amount for gift tax purposes was $345,800 in 2009, $1,772,800 in 2012, and $4,577,800 in 2020. The annual exclusion was $13,000 in 2009 and 2012, and is $15,000 in 2020. 3. Prepare an estate tax return for Benny as of the end of the current year after any recommended transfers. Assume he dies on December 31 of the current year. Assume the combined last medical and funeral costs are $100,000 and the estate administration cost is $150,000. Case Appendix chapter 14 Exhibit 14.7 | Tax Rate Schedule for Taxable Gifts and Estates (2009) Over $0 but not over $10,000 Over $10,000 but not over $20,000 Over $20,000 but not over $40,000 Over $40,000 but not over $60,000 Over $60,000 but not over $80,000 Over $80,000 but not over $100,000 Over $100,000 but not over $150,000 Over $150,000 but not over $250,000 Over $250,000 but not over $500,000 Over $500,000 but not over $750,000 Over $750,000 but not over $1,000,000 Over $1,000,000 but not over $1,250,000 Over $1,250,000 but not over $1,500,000 Over $1,500,000 but not over $2,000,000 Over $2,000,000 18% of such amount. $1,800 plus 20% of the excess of such amount over $10,000 $3,800 plus 22% of the excess of such amount over $20,000 $8,200 plus 24% of the excess of such amount over $40,000 $13,000 plus 26% of the excess of such amount over $60,000 $18,200 plus 28% of the excess of such amount over $80,000 $23,800 plus 30% of the excess of such amount over $100,000 $38,800 plus 32% of the excess of such amount over $150,000 $70,800 plus 34% of the excess of such amount over $250,000 $155,800 plus 37% of the excess of such amount over $500,000 $248,300 plus 39% of the excess of such amount over $750,000 $345,800 plus 41% of the excess of such amount over $448,300 plus 43% of the excess of such amount over $555,800 plus 45% of the excess of such amount over $780,800 plus 45% of the excess of such amount over Exhibit 14.8 | Tax Rate Schedule for Taxable Gifts and Estates (2012) 18% of such amount. Over $0 but not over $10,000 Over $10,000 but not over $20,000 Over $20,000 but not over $40,000 Over $40,000 but not over $60,000 Over $60,000 but not over $80,000 Over $80,000 but not over $100,000 Over $100,000 but not over $150,000 Over $150,000 but not over $250,000 Over $250,000 but not over $500,000 Over $500,000 $1,800 plus 20% of the excess of such amount over $10,000 $3,800 plus 22% of the excess of such amount over $20,000 $8,200 plus 24% of the excess of such amount over $40,000 $13,000 plus 26% of the excess of such amount over $60,000 $18,200 plus 28% of the excess of such amount over $80,000 $23,800 plus 30% of the excess of such amount over $100,000 $38,800 plus 32% of the excess of such amount over $150,000 $70,800 plus 34% of the excess of such amount over $250,000 $155,800 plus 35% of the excess of such amount over $500,000 Exhibit 14.9 | Tax Rate Schedule for Taxable Gifts and Estates (2020) 18% of such amount. Over $0 but not over $10,000 Over $10,000 but not over $20,000 Over $20,000 but not over $40,000 Over $40,000 but not over $60,000 Over $60,000 but not over $80,000 Over $80,000 but not over $100,000 Over $100,000 but not over $150,000 Over $150,000 but not over $250,000 Over $250,000 but not over $500,000 Over $500,000 but not over $750,000 Over $750,000 but not over $1,000,000 Over $1,000,000 $1,800 plus 20% of the excess of such amount over $10,000 $3,800 plus 22% of the excess of such amount over $20,000 $8,200 plus 24% of the excess of such amount over $40,000 $13,000 plus 26% of the excess of such amount over $60,000 $18,200 plus 28% of the excess of such amount over $80,000 $23,800 plus 30% of the excess of such amount over $100,000 $38,800 plus 32% of the excess of such amount over $150,000 $70,800 plus 34% of the excess of such amount over $250,000 $155,800 plus 37% of the excess of such amount over $500,000 $248,300 plus 39% of the excess of such amount over $750,000 $345,800 plus 40% of the excess of such amount over Benny and Martha Franklin Case 555/n

3 5 Mc Grow Problem 19-1 Two 15-year maturity mortgage-backed bonds are issued. The first bond has a par value of $10,000 and promises to pay a 11.0 percent annual coupon, while the second is a zero coupon bond that promises to pay $10,000 (par) after 15 years, with interest accruing at 10.5 percent. At issue, bond market investors require a 12.5 percent interest rate on both bonds. Required: a. What is the initial price on each bond? b. Now assume that both bonds promise interest at 11.0 percent, compounded semiannually. What will be the initial price for each bond? c. If market interest rates fall to 100 percent at the end of the fifth year, what will be the value of each bond, assuming annual payments as in (a) (state both as a percentage of par value and actual dollar value)? Answer is complete but not entirely correct. TOSHIBA Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does n Complete this question by entering your answers in the tabs below. Required A Required B Required C Now assume that both bonds promise interest at 11 percent, compounded semiannually. What will be the initial price for each bond? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Initial price Type here to search vo. JD VOID voin Bond 1 S 8,682 04 DISCORD $ Bond 2 774.27 < Required A HI Required C > 21 < Prev 3 of 4 Next >