On June 1, 2018, Brady purchased an option to buy 1,000 shares of General, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Brady decided to let the option lapse as of December 1, 2018. On his 2018 tax return, what should Brady report?
a. A $3,000 long-term capital loss.
b. A $3,000 short-term capital loss.
c. A $3,000 § 1231 loss.
d. A $3,000 ordinary loss.
e. None of the above.

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QUESTIONS Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTIONS 5.1 Calculate the Payback Period of both machines expressed in years, months and days) 5.2 Which machine should be chosen on the basis of payback period only? Why? 5.3 Calculate the Accounting Rate of Return on average investment of Machine (expressed to two decimal places) 5.4 5.5 Calculate the Net Present Value of each machine amounts expressed to the nearest Rand) Calculate the Internal Rate of Return of Machine 8 expressed to two decimal places) using interpolation INFORMATION Nite Limited intends purchasing a new machine and has a choice between the following two machines Intal cost Expected useful i Scrap value Expected net profit or net cash flow Year 1 Year 2 Year 3 Year 4 Year 5 Machine A R400 000 5 years 0 Net prof R20 000 R40 000 R50 000 R70000 0 (4 marks) (4 marks) Machine B (6 marks) (5 marks) R400 000 0 5 years Net cash flows R116000 R116000 The company estimates that it's cost of capital is 125% Depreciation is estimated R80 000 per year R116000 R116000 R116000 QUESTIONS Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTIONS 5.1 Calculate the Payback Period of both machines expressed in years, months and days) 5.2 Which machine should be chosen on the basis of payback period only? Why? 5.3 Calculate the Accounting Rate of Return on average investment of Machine (expressed to two decimal places) 5.4 5.5 Calculate the Net Present Value of each machine amounts expressed to the nearest Rand) Calculate the Internal Rate of Return of Machine 8 expressed to two decimal places) using interpolation INFORMATION Nite Limited intends purchasing a new machine and has a choice between the following two machines Intal cost Expected useful i Scrap value Expected net profit or net cash flow Year 1 Year 2 Year 3 Year 4 Year 5 Machine A R400 000 5 years 0 Net prof R20 000 R40 000 R50 000 R70000 0 (4 marks) (4 marks) Machine B (6 marks) (5 marks) R400 000 0 5 years Net cash flows R116000 R116000 The company estimates that it's cost of capital is 125% Depreciation is estimated R80 000 per year R116000 R116000 R116000

Answer rating: 100% (QA)

e None of the above Option e none of the above is the correct answer among the five choices that ha... View the full answer