Clare and Cora have been making wedding cakes in their homes for several years. The Health Department
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Their monthly payments would be $1,000 per month for interest and taxes and $100 per month for the principal on a commercial mortgage if they put $10,000 down. Clara and Cora each have $10,000 in savings they tan put into the business. Their husbands are also employed and would be able to provide some support during the start-up period. Both families are in the 28 percent marginal tax bracket. The women know that the first several years will be difficult, as they will need to build the business by more than word of mouth. As a result, their business plan shows losses of $5,000 in the first year, $4,000 in the second year, and $2,000 in the third year, but the fourth year and beyond show profits. These losses do not include either the rent or the mortgage payment. How do you suggest they set up their business? Should they buy or rent the building?
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Related Book For
Taxation For Decision Makers 2014
ISBN: 9781118654545
6th Edition
Authors: Shirley Dennis Escoffier, Karen Fortin
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