Finance Essay

Finance            Lets begin by breaking down each investment, The first investment which consists of “The condominium – expected annual increase in market value = 5%” and the value is $100,000 so you would take $100,000 x 5%=$5,000 profit then multiply the profit by 28% and you will get $1400 for the taxes.

The second investment which consists of “Municipal bonds – expected annual yield = 5%”, So what you do here is take $40,000 and multiply it by 5% and you will get a profit of $2,000, then take $2,000 and multiply it by 28% and the tax will be $560.            In addition to the other two investments, Lew McCarthy mentions “High-yield corporate stocks – expected dividend yield = 8%.” To figure this out, just take $40,000 multiplied by 8% and you will get $3200 as a profit, to find the tax just take $3200 and multiply by 28% and the answer will be $896 tax. Next, Lew mentions “Savings account in a commercial bank-expected annual yield = 3%” Once again take $40,000 and multiply by 3% and the profit is $1200, to find the tax, multiply $1200 by 28% and the tax is $336.            Finally, Lew mentions to the Brittens “High-growth common stocks – expected annual increase in market value = 10%; expected dividend yield = 0.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

” So, just take $40,000 and multiply it by 10% and the profit is $4,000, to find the tax just multiply $4,000 by 28% and the tax will be $1120.            Based on the above calculations, In my personal opinion the Brittens should go with the “Savings account in a commercial bank-expected annual yield = 3%”  for the simple fact its FDIC insured and they won’t have the risk of the market falling and then being on the losing end of stick, just remember that the stock market and any type of high yield investment is a gamble that can have disastrous consequences.Reference            “Jobs and Growth Tax Relief Reconciliation Act of 2003”            http://en.wikipedia.org/wiki/Jobs_and_Growth_Tax_Relief_Reconciliation_Act_of_2003#Investments,  6-19-2006