Tax/Div. Structure and Annuity Problems


s_available?subcom=detailed&id=341659808 2/4
Paper details
1. Champion Credit Union initiates a credit card product that yields 8.40%, with a funds cost of 3.00% (their
profit spread is 5.40%). Legacy Savings Bank enters that market with an equivalent product yield. How low
must they price their funding source to be equally able to retain earnings if the marginal tax rate is 20%, and a
competitive dividend payout is 30%?
2. If Highland Commercial Bank (HCB) enters that market with a marginal tax rate of 25%, and a dividend
payout of 20%, and they can obtain funding at 3.00%, what will be their retained earnings spread if they have
the same credit card price of 8.40%?
3. What credit price would HCB have to implement in order to match Champion’s retained earnings spread?
4. Mary Welch is retiring this year and wishes to set up an annuity for 20 years of her retirement. MetLife will
pay her 3.60% on that annuity, and she will fund it with $400,000. What will be her quarterly income from the
5. If she wants $9,000 per quarter, what must she put into the annuity, to the nearest dollar?


Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now





The post Tax/Div. Structure and Annuity Problems first appeared on COMPLIANT PAPERS.