A investor wishes to earn 7% on his capital after payment of taxes. If the income from an available investment will be taxed at an average rate of 42%, what minimum rate of return, before payment of taxes, must the investment offer to be justified ?

Related Mcqs:

1. A feasibility study shows that a fixed capital investment of P10,000,000 is required for a proposed construction firm and an estimated working capital of P2,000,000. Annual depreciation is estimated to be10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P3,500,000?

   A. 28.33 %
   B. 29.17 %
   C. 30.12 %
   D. 30.78 %

2. The ratio of the net income before taxes to net sales is called __________________?

   A. Current ratio
   B. Inventory turnover
   C. Profit margin ratio
   D. Price-earnings ratio

3. A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment ?

   A. P 2,500.57
   B. P 2,544.45
   C. P 2,540.56
   D. P 2,504.57

4. Shell Philippines, a multinational company, has a total gross income for a particular year of P 50,000,000. The taxable income after taking all deductions except for depletion is P 18,500,000. What is the allowable depletion allowance for that particular year? Take percentage of gross income for oil as 22%?

   A. P 9,358.41
   B. P 9,228.45
   C. P 9,250.00
   D. P 9,308.45

5. What refers to the cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds capital should or will earn ?

   A. Present worth factor
   B. Interest rate
   C. Time value of money
   D. Yield

6. Return on investment ratio is the ratio of the_____________?

   A. Net income to owner’s equity
   B. Market price per share to earnings per share
   C. Cost of goods sold to average cost of inventory at hand
   D. Net credit sales to average net receivable

7. First Benchmark Publishing’s gross margin is 50% of sales. The operating costs of the publishing are estimated at 15% of sales. If the company is within the 40% tax bracket, determine the percent of sales is their profit after taxes ?

   A. 21 %
   B. 20 %
   C. 19 %
   D. 18 %

8. What do you call a one-time credit against taxes ?

   A. Due credit
   B. Tax credit
   C. Credible credit
   D. Revenue credit

9. A student plans to deposit P1,500 in the bank now and another P3,000 for the next 2 years. If he plans to withdraw P5,000 three years from after his last deposit for the purpose of buying shoes, what will be the amount of money left in the bank after one year of his withdrawal? Effective annual interest rate is 10% ?

   A. P1,549.64
   B. P1,459.64
   C. P1,345.98
   D. P1,945.64

10. A man invested P110,000 for 31 days. The net interest after deducting 20% withholding tax is P890.36. Find the rate of return annually?

    A. 11.50 %
    B. 11.75 %
    C. 11.95 %
    D. 12.32 %