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# Consider the following:Bill Smith, a manager of a restaurant/bar

### Customer Question

Consider the following:Bill Smith, a manager of a restaurant/bar in Los Angeles, is in the 25% marginal tax bracket and pays an additional 5% in taxes to the state of California. Bill has \$20,000 invested in corporate bonds which is currently earning an average annual return of 7.5%.Additionally, Bill also has another \$20,000 invested in municipal bonds from the city of Los Angeles that are being used to redevelop depressed areas downtown. These bonds pay an average return of 5.4%.Assume that in both cases, Bill earns the same returns as calculated on both the corporate and municipal bonds each year for the next 15 years.Answer the following:What is the after-tax return on Bill’s corporate bonds for the current year?
What is the after-tax return on his municipal bonds for the current year?
Which investment earns more returns: corporate or municipal bonds?
What would the balance in each account be at the end of the fifteenth year?
Present the calculations and answers in Excel spreadsheet format or in Word format. Write the interpretation of results in a Word document. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M2_A2.xls and LastnameFirstInitial_M2_A2.doc.By Wednesday, May 18, 2016, deliver your assignment to the M2: Assignment 2 Dropbox.Assignment 2 Grading Criteria
Maximum Points
Correctly computed the tax calculations showing the formulae and the necessary steps.
32
Analyzed the calculations to draw valid conclusions on the investments.
48
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.
20
Total:
100
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Submitted: 1 year ago.