You have just taken a job that requires you to move to a new city. in relocating, you face the decision of whetherto buy orrent a house. a suitable house costs $300,000 and you have saved enough forthe down payment. the (nominal)mortgage interest rate is 10% per year. and you can also earn 10% per year on savings. mortgage interest payments aretax deductible, interest earnings on savings are taxable. and you are in a 30% tax bracket. interest is paid or received, andtaxes are paid, on the last day of the year. the expected inflation rate is 5% per year. the cost of maintaining the house (replacing womout roofing, painting, and so on) is 6% of the value of the house. assumethat these expenses also are paid entirely on the last day of the year. if the maintenance is done. the house retains its fullreal value. there are no other relevant costs or expenses..9. what is the expected after-tax real interest rate on the home mortgage? b. what is the user cost of the house? c. if all you care about is minimizing your living expenses, at what [annual] rent level would you bejust indifferent betweenbuying a house and renting a house of comparable quality? rent is also paid on the last day of the year.

What are the general categories of capital budget scenarios? describe the overall decision-making context for each.

Bridgeport company began operations at the beginning of 2018. the following information pertains to this company. 1. pretax financial income for 2018 is $115,000. 2. the tax rate enacted for 2018 and future years is 40%. 3. differences between the 2018 income statement and tax return are listed below: (a) warranty expense accrued for financial reporting purposes amounts to $7,500. warranty deductions per the tax return amount to $2,200. (b) gross profit on construction contracts using the percentage-of-completion method per books amounts to $94,700. gross profit on construction contracts for tax purposes amounts to $67,100. (c) depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. depreciation of these assets amounts to $75,700 for the tax return. (d) a $3,600 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. 4. taxable income is expected for the next few years. (assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) prepare the reconciliation schedule for 2017 and future years. (b) prepare the journal entry to record income tax expense for 2017. (c) prepare the income tax expense section of the income statement beginning with “income before income taxes.” (d) determine how the deferred taxes will appear on the balance sheet at the end of 2017.

Amarket that consists of all possible consumers regardless of their specific needs or wants is a