Finance

Down payment of 10,000
Total Income of 100,000
Total income after tax  72,000
Total cost 100,000
Expected annual increase in market value  2  2,000
Expected annual increase in market value after tax
2,000 -  (2,000 x 28)  1,440

Assuming that the Britten pay for the condominium in one year only. After paying for Condominium by using the capital of 40,000 and also 60,000 of their Income they will be left with 40,000 taxable income of which only 28,800 will be left after tax has been deducted as the Britten fall under the 28 marginal tax bracket.

Total Capital140,000Total Cost100,000Income40,000Tax (28)11,200After Tax Income28,800
If the Brittens invest in condominium then a total of marginal tax that they pay each year will be of 1,440 which is exclusive of tax that they pay on their monthly income. Total marginal income tax payment will be of 560.

Municipal Bond
Total Investment of 40,000
Expected annual yield  3  1,200
Expected annual yield after tax
1,200 - (1,200 x 28)  864

After investing in municipal bond by using the capital of 40,000, they will be able to gain an annual yield of 3 every year. Assuming that every year the income remains constant i.e. 40,000 then marginal profit after tax will be of 864. As 3 of 40,000 is only 1,200 and Britten fall under the 28 marginal tax bracket therefore, only 864 will be left. Total marginal income tax payment will be of 336.

High Yield Corporate Stocks
Total Investment of 40,000
Expected annual dividend yield  5  2,000
Expected annual dividend yield after tax
2,000 - (2,000 x 28)  1,440

After investing in high yield corporate stocks by using the capital of 40,000, they will be able to gain an annual dividend yield of 5 every year. Assuming that every year the income remains constant i.e. 40,000 then marginal profit after tax will be of 1,440. As 5 of 40,000 is only 2,000 and Britten fall under the 28 marginal tax bracket therefore, only 1,440 will be left. Total marginal income tax payment will be of 560.

Savings in account in Commercial Bank
Total Investment of 40,000
Expected annual yield  1  400
Expected annual yield after tax
400 - (400 x 28)  288

After investing in savings accounts in a commercial bank by using the capital of 40,000, they will be able to gain an annual yield of 1 every year. Assuming that every year the income remains constant i.e. 40,000 then marginal profit after tax will be of 288. As 1 of 40,000 is only 400 and Britten fall under the 28 marginal tax bracket therefore, only 288 will be left. Total marginal income tax payment will be of 112.

High Growth Common Stocks
Total Investment of 40,000
Expected annual dividend yield  0
Expected Growth Rate  6

Assuming that the Brittens sell their common stock after one year therefore, total marginal growth will be 40,000 x 6  2,400. After investing in high growth common stock by using the capital of 40,000, they will not be able to gain any annual yield since annual yield is zero however, because of 6 growth rate value of common stock will rise by 6 every year. Assuming that the Brittens sell their common stock after one year then marginal profit after tax will be of 1,728. As 6 of 40,000 is only 2,400 and Britten fall under the 28 marginal tax bracket therefore, only 1,728 will be left. Total marginal income tax payment will be of 672.

After doing all calculations that the minimum marginal income tax can be paid by the Brittens if they invest their 40,000 of income in a savings account in a commercial bank.