Corporate Income Tax Rate Assignment | Homework for You
June 11th, 2020
- A bank is considering some investment portfolio shifting. In doing so, the bank is considering selling $1,000,000 in 2 year state government bonds with a coupon interest of 4 percent, and purchasing $1,000,000 in 2 year county government bonds with a coupon interest of 5 percent issued at par. The state bonds being sold are listed at par on the bank’s books but they have a current market value of $950,000
Assume that the bank’s corporate income tax rate is 35 percent.
- Calculate the TOTAL net effect on the bank’s earnings in the current full year resulting from the shift. (12 points)
- Calculate the dollar income tax impact for the bank in the current year. Your answer must also indicate whether this is a tax benefit or a tax liability. (3 points) Get Finance homework help today